The deceleration of broad money growth observed in 2008 increased towards the turn of the year and continues at a rapid pace. Developments in money and credit aggregates have been volatile over the past few months. This may be explained partly by the sharp reduction in the key ECB interest rates, which may have encouraged shifts in the allocation of funds.
If we disregard this volatility, the continued deceleration in the pace of underlying monetary expansion and in credit growth seems to reflect the sharp deterioration in economic activity. As regards financing conditions in the euro area, external financing costs have been declining since October last year, and particularly sharply since the start of this year.