AFP: Eurozone bank lending to businesses rebounded in March after slowing in February, European Central Bank figures showed yesterday, in an encouraging sign for policymakers.
Growth in lending to businesses and households sped up to 2.4 percent in March from 2.0 percent in February, the ECB calculated in a statement. Adjusted for some purely financial transactions, growth was even faster at 2.7 percent, more than making up for a dip in February.
Also in adjusted terms, growth in loans to households edged up to 2.4 percent, with lending for consumption increasing by 4.7 percent, while mortgage lending grew 3.0 percent.
Among businesses, growth in lending to non-financial firms more than cancelled out the slowdown seen in February, reaching 2.3 percent.
The level of lending to the real economy is a closely-watched indicator of the economic outlook.
The pick-up in March “will likely reinforce the ECB’s improved perception of eurozone growth,” said economist Howard Archer of IHS Markit, labelling the data “a thoroughly pleasing set of news for the ECB.”
From April, the central bank has reduced measures designed to pump cash through the financial system and encourage banks to lend to businesses and households, cutting its monthly purchases of government and corporate bonds from 80 to 60 billion euros (US $65 billion).
So far, policymakers have resisted calls to wind down its mass bond-buying any further or to raise interest rates from historic lows, saying that inflation would have little chance of reaching its target of just below 2.0 percent without the ECB’s massive support.
The ECB “will not consider making any adjustments to the programme until late on in 2017,” when elections in France and Germany will be over, IHS’ Archer predicted.
It would begin to wind down the bond purchases gradually in monthly steps starting in early 2018, he said.