Euro area monetary aggregates M3 and M1 show increased growth
The annual growth rate of broad monetary aggregate M3 in the euro area increased to 3.3 percent in January 2026 from 2.8 percent in December. Narrower aggregate M1 also saw its annual growth rate rise to 5.3 percent from 4.7 percent in the same month.
Broad and narrow money gain momentum
The broad monetary aggregate M3's annual growth rate accelerated to 3.3 percent in January 2026, up from 2.8 percent in December, averaging 3.0 percent over the three months up to January.
This upward trend was largely driven by the narrower aggregate M1, which comprises currency in circulation and overnight deposits, seeing its annual growth rate increase to 5.3 percent in January from 4.7 percent in December.
Within M3 components, short-term deposits other than overnight deposits (M2-M1) showed an annual growth rate of -0.6 percent, a slight decrease from -0.4 percent in December.
Marketable instruments (M3-M2) experienced a notable turnaround, increasing to 1.6 percent in January from -0.6 percent in December.
This indicates a shift in liquidity preferences and investment patterns within the euro area's financial landscape, reflecting evolving economic conditions and market sentiment.
Household and corporate lending diverge
Adjusted loans to households maintained a stable annual growth rate of 3.0 percent in January, unchanged from the previous month.
Conversely, adjusted loans to non-financial corporations saw their annual growth rate decrease to 2.8 percent in January from 3.0 percent in December.
This divergence points to differing credit dynamics between these private sector segments.
Looking at deposit holding sectors, deposits placed by households increased to 3.2 percent in January from 3.0 percent.
Deposits by non-financial corporations remained stable at 3.4 percent.
A significant rise was observed in deposits placed by investment funds other than money market funds, which jumped to 9.8 percent in January from 3.7 percent in December, reflecting increased liquidity holdings.
Liquidity signals cautious optimism
The acceleration in broad and narrow money growth suggests an increase in liquidity within the euro area economy, potentially indicating a cautious improvement in economic activity.
While household lending remains stable, the slight dip in corporate loans warrants attention, hinting at continued prudence in business investment.
The overall monetary picture, however, provides a foundation for potential future economic expansion, albeit with some underlying sectoral variations.