FRANKFURT: The rate of growth in eurozone bank loans to the private sector picked up in January, the European Central bank said Friday, signalling modest support for the 17-nation economy.
A moderation in the ECB's M3 money supply indicator meanwhile supported the central bank's assessment that rising inflation should not spiral out of control.
Bank lending expanded by 2.4 percent from the same month a year earlier, better than a revised 1.9 percent in December, an ECB spokesman said, resuming an upward trend that was interrupted that month.
Lending to companies gained 0.4 percent on the year, halting an extended period of declines and prompting IHS Global Insight chief European economist Howard Archer to see some light at the end of the tunnel for business credits.
"This is a modest boost to hopes that eurozone banks may be becoming more willing to lend to what they perceive to be less risky businesses," he said.
The central bank said that eurozone money supply as measured by its M3 indicator grew by 1.5 percent in January, a rate that was lower than the increase of 1.7 percent in December.
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, could also begin to pick up and prompt the ECB to raise interest rates.
The ECB has kept its key interest rate at a historic low of one percent since May 2009 and economists do not expect a change in the near future, even though inflation pressure has begun to build. Eurozone inflation stood at 2.4 percent in January, above the ECB target of below but close to 2.0 percent.
But the dip in M3 could be seen as a sign the pressure will not be sustained into 2012, which is what ECB policymakers have said for several months.
An economic model established by Commerzbank "confirms the ECB's assessment that, at least based on monetary indicators, inflationary pressures over the medium term should remain contained," analyst Michael Schubert said.
The central bank should thus continue to keep rates steady as it focuses on the financing needs and weaker economies of countries on the eurozone's periphery.
"Higher interest rates are the last thing that Ireland, Greece, Portugal, Spain and Italy need," Archer noted.
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