FRANKFURT (AFX) - The European Central Bank said the governing council was aware of both of the recently identified distortions in M3 growth when it decided to cut interest rates last week.
At the time of the rate cut, ECB president Wim Duisenberg said that one distortion -- related to the inclusion in M3 of non-resident holdings of units and shares in money market funds -- had inflated M3 growth by around 0.5 percentage points.
He said the ECB was also studying a second distortion relating to non-resident holdings of other marketable paper, but added that the ECB did "not expect that to show the same dynamics".
He noted"We have the impression that this will be more stable than this first correction."
However, in yesterday's ECB monthly bulletin the central bank said the second distortion could be as big as the first, fuelling expectations that sharp downward adjustments in M3 figures could lead to further interest rate cuts.
But an ECB spokesman said the monthly bulletin contained nothing which council members did not know when they decided to cut interest rates on May 10.
"Information contained in the May monthly bulletin was already available to governing council members last Thursday," he said.