Monetary weakness casts doubts over recovery

Survey-based euro-zone activity indicators like the composite PMI have continued to strengthen in recent months, raising the prospect that the currency union’s economy may finally emerge from its near two-year recession in the third quarter. However, the continued weakness of the news on money growth and banking lending - the so-called “second pillar” of the ECB’s monetary policy strategy - suggests that further policy stimulus may well be needed if the recovery is to gather further pace and be sustained.