Euro zone money supply and credit growth both slowed in June.
M3 money supply growth eased in June by more than expected to 8.3 per cent year-on-year from 8.5 per cent in May, the European Central Bank said today.
Private sector credit growth slowed to 5.1 per cent from an upwardly revised 5.2 per cent in May, a development analysts termed as disappointing.
Analysts said the slower growth rate of M3 could be an early sign investors are trimming the cash positions they built up due to financial market uncertainty.
"The slight decline in M3 is linked to the slowdown in portfolio shifts, which has now occurred for the second month in a row," said Mr Michael Schubert, an analyst at Commerzbank in Frankfurt.
Mr Schubert and other analysts said the slowdown in credit growth was disappointing given that the ECB had expected a stabilisation.
The growth of loans to the private sector slowed to 4.5 per cent year-on-year from 4.6 per cent in May, ECB data showed.
"Obviously the economy is not functioning as well as had been assumed. The ECB has not yet closed the door to further interest rate cuts," Mr Schubert said.