Monetary Developments in the Euro Area: October 2024
1. Introduction
In October 2024, the euro area economy continued to face significant challenges, including rising inflation and slowing growth. The European Central Bank (ECB) closely monitored monetary developments and took further steps to support price stability and economic recovery.
2. Monetary Policy
At its October meeting, the Governing Council of the ECB decided to increase the key interest rates by 50 basis points. This brought the main refinancing rate to 2.50%, the marginal lending facility rate to 3.00%, and the deposit facility rate to 2.00%. The decision was aimed at curbing inflationary pressures and bringing inflation back to the ECB’s target of 2% over the medium term.
3. Monetary Aggregates
In October 2024, the growth rate of broad money (M3) decelerated to 5.0% year-on-year, from 5.2% in September. The slowdown was mainly due to a decline in the growth rate of overnight deposits and a stabilization in the growth rate of time deposits. The growth rate of narrow money (M1) also moderated to 1.0% year-on-year, from 1.2% in the previous month.
4. Credit Developments
Loan growth to the private sector continued to slow in October 2024. The annual growth rate of loans to non-financial corporations decreased to 3.6% from 3.8% in September, while the growth rate of loans to households remained unchanged at 2.2%. The slowdown in credit growth reflected both the impact of higher interest rates and the ongoing economic uncertainty.
5. Financial Markets
Financial markets experienced increased volatility in October 2024 amid concerns about the global economic outlook and geopolitical risks. Nevertheless, the euro exchange rate remained relatively stable against the US dollar, trading around 1.15.
6. Financial Stability
The ECB continued to monitor financial stability risks closely. The COVID-19 pandemic had left a number of vulnerabilities in the financial sector, and the ongoing economic challenges posed additional risks. The ECB remained vigilant in its efforts to safeguard financial stability and ensure the smooth functioning of the financial system.
7. Conclusion
Monetary developments in the euro area remained challenging in October 2024, with inflation remaining elevated and economic growth slowing. The ECB took further monetary policy actions to address these challenges and maintain price stability. The ECB also monitored financial markets and financial stability risks closely and stood ready to adjust its policies as needed.
Monetary developments in the euro area: October 2024
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