Frankfurt, March 28:

Prospects for further rate increases by the European Central Bank were supported on Wednesday by data showing that a key measure of the eurozone money supply rose to a record high point in February.

The eurozone’s M3 money supply, monitored by the European central Bank as a guiding indicator of inflation, grew by 10.0 per cent in February, the fastest growth rate since the introduction of the euro, the ECB calculated in a statement.

Growth was slightly higher than expected: analysts’ consensus forecasts had been pencillingin M3 growth of 9.9 per cent in February.

The ECB closely monitors developments in the money supply when deciding the appropriate level of interest rates because it sees a link between the level of liquidity in the economy and future inflation.

The guardian of the euro calculates that the money supply needs to expand by an annual 4.5 per cent to serve as a basis for non-inflationary economic growth.

But M3 money supply, which covers cash, overnight deposits, other short-term deposits, repurchase agreements, shares and units in money market funds and debt securities with a maturity of up to two years, has been growing much faster than that for around six years.