However, the remaining tensions in euro area sovereign debt markets and their impact on credit conditions, as well as the process of balance sheet adjustment in the financial and non-financial sectors, are expected to continue to dampen the underlying growth momentum.
In addition, firms’ moves to increase their on-hand liquidity are apparently settling down. As a result, credit demand in the private sector has weakened further. Money stock (M2+CDs) has recently been showing a slightly higher year-to-year growth rate, mainly because firms’ curtailment of on-hand liquidity has been less significant than that of the same period in the previous year.