FRANKFURT, January 29: German annualised money supply growth eased slightly to 4.6 per cent in December compared to the average of the fourth quarter of 1996 from 4.7 per cent in November, the Bundesbank said onThursday.The moderate December developments meant that M3 expanded by 4.8 per cent in the final quarter of 1997 compared with the last quarter of 1996 -- in the middle of the Bundesbank's 3.5 per cent to 6.5 per cent 1997 target zone.
The central bank said M3 growth had been "moderate" over the period.
Money supply growth was boosted by strong private sector lending and high inflows to domestic non-banks, but also dampened by public borrowing levels and a slight strengthening of monetary capital formation.
Economists had on average forecast that M3 would climb by 4.7 per cent during December.
"This is totally within our range of expectations," said Mathias Haffner, economist at BZW in Frankfurt.
"In the short-term, this will certainly have no impact on interest rates. I don't think moneysupply figures will be the decisive factor for monetary policy in 1998; it will be inflation rates, as well as general economic developments and of course the consequences of the Asian situation."
The Bundesbank said short-term savings deposits expanded strongly in December, while three-month savings deposits grew moderately. Cash in circulation and sight deposits fell once again, the central bank said.
The Bundesbank also said monetary capital formation grew by four per cent in December.
The figures augur well for money supply developments in 1998, some economists said. The Bundesbank's target M3 growth range for this year is slightly lower than in 1997, at three to six per cent.
"Looking at the first figure in January, we will have a positive basis effect for the figure to come," said Michael Hochguertel of BHF Bank."So it's not only a good figure for December, it's also indicating that in January we will have M3 developments which are going to be in the lower range of the corridor," Hochguertelsaid.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
