Third, the shift in international investor sentiment in favour of the euro area economy has led to capital inflows, which – as foreigners purchase euro-denominated securities from domestic residents – have also contributed to the acceleration of M3 growth. Such phenomena suggest some caution in interpreting the latest annual growth rates.
Nevertheless, they should not lead to the conclusion that the strong recent dynamism of M3 can be discounted. The fact remains that the underlying rate of monetary expansion continues to be strong. Higher policy rates and short-term interest rates are starting to influence monetary and credit dynamics, although, as yet, they have not significantly dampened their overall strength.