Eurozone private sector lending stronger in February: ECB

25th March 2011, Comments 0 comments

The rate of growth in eurozone bank loans to the private sector rose again in February, the European Central bank said Friday, signalling more support for growth across the 17-nation bloc.

Lending expanded by 2.6 percent from the same month a year earlier, up from 2.4 percent in January, an ECB spokesman said, reinforcing an upward trend that had been interrupted in December.

The central bank also said that eurozone money supply as measured by its M3 indicator grew by 2.0 percent in February, a rate that was stronger than the increase of 1.5 percent the previous month.

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 is picking up and could 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 but financial markets expect it to rise to 1.25 percent in April.

Members of the central bank's governing council are concerned about inflation, which at 2.4 percent is now well above the ECB's target of just under 2.0 percent.

A breakdown of the ECB loan data showed that lending to non-financial corporations gained 0.6 percent in February, slightly better than the January figure of 0.5 percent.

That measure had been contracting at the end of 2010.

Loans to households were 3.0 percent stronger on a 12-month basis, but that marked a slight easing from growth in January of 3.1 percent.

Consumer credits showed a decline of 0.9 percent in February, a narrow improvement on the previous month's decline of 1.0 percent.

© 2011 AFP

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