Eurozone bank lending strengthens in July: ECB

26th August 2010, Comments 0 comments

Bank lending to the eurozone private sector gained a solid 0.9 percent in July, the European Central Bank said on Thursday, a sign of expanding activity in the 16-nation bloc.

The increase came following a rise of 0.5 percent in June, an ECB spokesman said, revising higher the bank's initial estimate of a 0.3 percent rise.

Growth of the ECB's M3 money supply indicator, which measures cash, deposits and other financial benchmarks, increased by 0.2 percent in July, he added.

In June it had also risen by 0.2 percent, the first increase since October 2009 after a slight rise initially reported for January was revised lower.

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 begin to pick up and incite the ECB to raise interest rates.

Its main interest rate currently stands at a record low of one percent but it is not expected to be raised before well into 2011 at the earliest.

The eurozone emerged from recession last year and is trying to nurture its recovery as core economies post strong growth rates while those on the periphery struggle with high public deficits and debt.

© 2010 AFP

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