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ECB-EU-EUROZONE-BANKING
ECB sees steady loan growth to firms, households in June
FRANKFURT AM MAIN, July 24, 2019 (BSS/AFP) – The pace of growth in lending
to eurozone companies and households held steady in June, European Central
Bank data showed Wednesday, the eve of a policy meeting expected to offer
hints at new stimulus.
Overall, private sector credit growth picked up from 3.3 percent year-on-
year to 3.5 percent, adjusting for some purely financial transactions.
But all of the increase was down to more borrowing by financial firms,
which account for a small fraction of the total in the single currency bloc.
Credit to non-financial companies expanded by 3.8 percent, while lending to
households grew by 3.3 percent — the same rates as seen in May.
The ECB’s key interest rates are at historic lows, and under a programme of
so-called “quantitative easing” it has so far built up a stock of 2.6
trillion euros ($2.9 trillion) in government and corporate bonds.
The central bank also plans to offer a new round of cheap loans to banks.
Nevertheless, what president Mario Draghi last month said an “ample degree
of monetary accommodation” has not been enough to counteract forces braking
economic growth and holding inflation back from the ECB’s target of just
below 2.0 percent.
The headwinds include trade tensions between the US, Europe and China, the
threat of a no-deal Brexit and weakness in emerging markets, as well as
geopolitical risks like the US-Iran confrontation in the Gulf.
Many observers expect Draghi to hint Thursday at possible new moves to
further boost the eurozone.
The first step could be a cut further into negative territory for the rate
banks pay on their deposits.
That would increase the cost to lenders of parking cash with the ECB rather
than investing into the wider economy.
BSS/AFP/HR/1450