Eurozone lending to firms slows in February: ECB

Advertising

Frankfurt am Main (AFP)

Lending to eurozone businesses slowed in February, European Central Bank data showed Tuesday, in a small setback for the Frankfurt institution as it seeks to wean the economy off its crisis-era stimulus measures.

Credit to firms grew 3.1 percent year-on-year last month, adjusting for some purely financial transactions, a slowdown of 0.3 percentage points compared with January.

Lending growth to households meanwhile held steady at 2.9 percent.

Overall, lending to the private sector expanded by 3.0 percent last month, the ECB said, down from 3.3 percent in January.

Credit growth is a closely-watched indicator for the ECB to measure the impact of its easy-money policies, designed to bolster growth and push inflation towards its goal of just under 2.0 percent.

It has set interest rates at historic lows, offered cheap loans to banks and bought tens of billions of euros per month in bonds in a bid to pump cash through the financial system and to businesses and households.

In a sign of growing confidence in the eurozone recovery, the ECB earlier this month dropped a long-standing pledge that it stood ready to ratchet up bond-buying again if needed -- taking a small step towards the stimulus exit door.

Economic growth in the 19-country eurozone hit 2.3 percent in 2017, the highest level in a decade.

Inflation however remains stubbornly low, reaching just 1.1 percent in February, complicating the ECB's efforts to wind down its unprecedented support for the eurozone economy.

In another disappointing reading on Tuesday, the ECB said the growth rate in the eurozone's overall money supply, known as M3, decreased to 4.2 percent in February, from 4.5 percent in January.

The ECB regards M3 money supply as a barometer for future inflation.