Eurozone credit growth picking up: ECB

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Bank loans to the private sector in the eurozone picked up in October, the European Central Bank said Friday, suggesting the financial sector is slowly returning to normal.

Lending rose 1.4 percent in October compared to the same period last year, after a gain of 1.2 percent in September, provisional ECB data showed.

Loans to households rose by 2.9 percent but corporate loans shrank by 0.6 percent, the same result as last month.

Michael Schubert, an analyst from Commerzbank, said the latter figure would likely be a "disappointment" for the ECB, who said in its November monthly report it was expecting a "turning point" in loans to business this year.

Meanwhile, the ECB said eurozone money supply grew by 1.0 percent in October on an annual basis, compared to 1.1 percent last month.

The ECB regards this figure as a key guide to pressures likely to affect inflation in the medium term.

"We therefore do not see any inflationary pressure from the monetary side," said Fabienne Riefer from Postbank research.

The ECB has kept its key interest rate at a historic low of one percent since May last year and economists do not expect a change in the near future.

The bank looks closely at the money supply data with the view of raising interest rates if it suspects inflation is set to rise.

© 2010 AFP

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