| Consensus | Consensus Range | Actual | Previous | Revised | |
| Y/Y - 3-Month Moving Average | 3.3% | 3.2% to 3.4% | 3.2% | 3.0% | |
| Private Sector Lending -Y/Y | 4.1% | 3.9% | 3.8% |
Highlights
Euro-area monetary conditions strengthened modestly in July 2026. Annual growth in the broad monetary aggregate M3 increased from 3.3 percent to 3.4 percent, with a three-month average of 3.2 percent, indicating a gradual expansion in overall liquidity. However, M1 growth declined from a revised 3.5 percent to 3.1 percent, suggesting weaker growth in highly liquid funds available for immediate spending. This divergence may reflect a shift from overnight deposits towards longer-term, interest-bearing instruments rather than a general contraction in money supply.
Credit developments were more encouraging. Adjusted lending to households rose marginally from 3.0 percent to 3.1 percent, pointing to a steady but cautious recovery in household borrowing. More significantly, loan growth to non-financial corporations accelerated from 4.0 percent to 4.4 percent. This may indicate improving business confidence, stronger financing requirements and increased willingness to undertake investment. Claims on the private sector also strengthened from a revised 3.8 percent to 4.1 percent, confirming broader credit expansion.
In essence, the figures present a cautiously positive outlook as financing activity is gaining momentum, particularly among businesses, while households remain more restrained. The slowdown in M1 nevertheless suggests that stronger credit growth has not yet produced an equivalent increase in immediately available liquidity or consumption demand compared to the previous month. These latest updates take the RPI to 8 and the RPI-P to 9, meaning that economic activities are now within the expectations of the euro area economy.
Market Consensus Before Announcement
The consensus sees slightly faster growth at 3.3 percent in July from 3.0 percent in June.
Definition
M3 is the European Central Bank's (ECB) preferred broad measure of money supply. Since January 1999, the ECB has tended to focus on the 3-month moving average of the annual growth rate to judge underlying M3 trends although the significance of its 4.5 percent reference rate has been steadily downgraded with time. The private sector lending counterpart is usually seen as the most important element of the M3 report.
Description
While other central banks have virtually ignored money supply data, the European Central Bank has not. Thanks to the influence of the Bundesbank in organizing the ECB, M3 money supply was established as one of the 'two pillars' of monetary policy used by the ECB, the other being the harmonized index of consumer prices (HICP). While the target for HICP is two percent, the seemingly largely ignored reference target for M3 growth is 4.5 percent as measured by a three month moving average which is compared with the same three months a year earlier.
M3 measures overall money supply. It consists of M1 which is currency in circulation plus overnight deposits and M2 which include deposits with an agreed maturity up to two years plus deposits redeemable at up to three months' notice. Not all M3 measures are alike. For example, ECB M3 is approximately equivalent to the Federal Reserve's M2 measure. Because an increase in M3 leads to price inflation, this figure can also be indicative of the likelihood of future interest rate hikes.