Over the medium term inflation is expected to increase, supported by our monetary policy measures, the ongoing economic expansion and robust wage growth. Turning to the monetary analysis, broad money (M3) growth increased to 5.7% in August 2019, after 5.1% in July. Sustained rates of broad money growth reflect ongoing bank credit creation for the private sector and low opportunity costs of holding M3.
The narrow monetary aggregate M1 continues to be the main contributor to broad money growth on the components side. The growth of loans to firms and households remained solid, benefiting from the continued passthrough of our accommodative monetary policy stance to bank lending rates.