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ECB says Eurozone credit growth picking up
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ECB says Eurozone credit growth picking up
AFP - Thursday, December 30
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ECB says Eurozone credit growth picking up
FRANKFURT (AFP) - – Bank loans to the eurozone private sector increased further in November, the European Central Bank said Wednesday, a sign the financial sector is slowly returning to normal despite the debt crisis.
Lending rose by 2.0 percent from the same month a year earlier, compared with a revised 1.5 percent in October, an ECB spokesman said, pursuing a trend that began in April.
A breakdown of the data showed that growth of loans to households declined slightly however to 2.7 percent from 2.9 percent, with the increase in lending for mortgages dipping to 3.4 percent from 3.6 percent.
Loans to non-financial corporations showed a slight contraction of 0.1 percent last month, but that was an improvement from the decline of 0.5 percent in October.
"This is a welcome limited step in the right direction," noted IHS Global Insight's chief European economist Howard Archer.
"This raises hopes that eurozone banks may be becoming more willing to lend to what they perceive to be less risky businesses."
The ECB also said that eurozone money supply as measured by its M3 indicator grew by 1.9 percent in November, up markedly from the October reading of 0.9 percent.
The ECB regards this figure as a key guide to pressures likely to affect inflation in the medium term.
Lending and money supply data are widely-followed indicators of consumer demand and overall economic activity.
Rising figures point to increased demand, which normally means inflation could also begin to pick up and incite the ECB to raise interest rates.
The ECB has kept its key interest rate at a historic low of one percent since May 2009 and economists do not expect a change in the near future.
Archer forecast the ECB would keep its main interest rate unchanged "deep into 2011, given that the eurozone's recovery will be increasingly pressurized by tighter fiscal policy kicking in over the coming months as well as by recurrent sovereign debt tensions."
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