Growth in lending to eurozone firms and households picked up in
November, the penultimate month of a key element in the European Central
Bank’s economic stimulus, official data showed Thursday.
The pace of year-on-year growth in household borrowing accelerated to
3.3 percent while the rate for firms reached 4.0 percent, ECB data
showed — both 0.1 percentage points higher than in October.
Folding in loan growth data from non-bank financial firms like
insurers and pension funds showed that the overall pace of credit
increase in the private sector — adjusted for some purely financial
transactions — held steady at 3.3 percent in November.
The pace of growth in lending is closely watched by central bankers
and economists for signs of how effective ECB stimulus to the eurozone
has proved.
Governors at the Frankfurt institution agreed in December to end mass
purchases of government and corporate bonds, which amounted to 2.6
trillion euros ($3.0 trillion) since 2015.
The “quantitative easing” (QE) scheme was intended to pump cash
through the financial system and into lending to firms and households,
powering economic growth and boosting inflation towards the ECB target
of just below 2.0 percent.
But although the threat of deflation — a damaging downward spiral of
prices and economic activity — has been dispelled, the central bank’s
most recent forecasts see it achieving its price growth target only in
2021.
To continue coaxing inflation along, the ECB plans to reinvest the
proceeds from its massive stock of bonds and keep interest rates at
historic lows “at least through the summer” this year.
Continued sluggish price growth could see them remain there well past
the end of President Mario Draghi’s tenure at the institution in
October.
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