ZCZC
EU-ECB-EUROZONE-BANKING-LOANS
Eurozone loan growth to firms and households marks time in April
FRANKFURT AM MAIN, May 29, 2018 (BSS/AFP) – Growth in lending to eurozone
firms and households paused in April, official data showed Tuesday,
complicating the picture for the European Central Bank as it weighs ending
its economic stimulus.
Adjusted for some purely financial transactions, growth in borrowing to
firms was flat month-on-month, at 3.3 percent, ECB data showed.
Meanwhile lending to households expanded by 2.9 percent, also the same pace
as in March.
Overall, credit to the private sector in the 19-nation single currency area
grew at 3.1 percent last month, slightly higher than March as financial firms
like pension funds and insurance companies borrowed more.
The pace of loan growth is a key indicator of financial health for the ECB
as it considers when to withdraw its massive support for the eurozone
economy.
Aiming to boost growth and stoke inflation to its target of just below 2.0
percent, the Frankfurt institution has set interest rates at historic lows
and buys 30 billion euros ($35 billion) of government and corporate bonds per
month.
Both policies are designed to pump cash through the financial system and
into the real economy, where it can power investments, hiring and consumer
spending.
April’s pause in loan growth comes as observers have pointed to a soft
patch for the eurozone in early 2018 after an unexpectedly strong performance
last year.
While some see slower first-quarter expansion and weaker confidence
indicators as merely a blip, others suggest they could weigh on inflation in
the coming months, pushing the ECB to delay weaning the bloc off its
medicine.
BSS/AFP/SR/1540 HRS