FRANKFURT: Growth in eurozone money supply, a key indicator of demand in the economy, slowed again in December, the European Central Bank said on Friday. The M3 indicator rose 1.6 percent last month, following a gain of 2.0 percent in November. The slowdown was unexpected: analysts had been pencilling in growth of 2.1 percent for December. The ECB regards the M3 figure as a key guide to inflation pressures and uses it to set interest rates accordingly. The central bank seeks to keep eurozone inflation below but close to 2.0 percent but it stood at 2.7 percent in December. Meanwhile, the rate of growth in eurozone bank loans to the private sector slowed substantially to 1.0 percent in December from 1.7 percent in November, the ECB said. The central bank cut its benchmark interest rate by a quarter of a percentage point to 1.00 percent in December, arguing that future inflation is likely to slow as the eurozone debt crisis puts the brakes on economic growth in the single currency area. The latest M3 data is likely to bolster the case for more rate cuts in the eurozone as it seeks to stave off recession.

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