The pace of growth in lending to businesses in the eurozone slowed in December, European Central Bank data showed Friday, in a mild setback for the Frankfurt institution. Credit to businesses grew by 2.9 percent year-on-year last month, adjusting for some purely financial transactions, a drop of 0.2 percentage points compared with the figure for November. Meanwhile, lending growth to households held steady in December, at 2.8 percent.
Overall, lending to the private sector expanded by 2.8 percent last month, down from 2.9 percent in November. Credit growth is a key indicator for the ECB of how its easy-money policy is affecting the real economy. It has set interest rates at historic lows, offered cheap loans to banks and bought tens of billions of euros per month in bonds in a bid to pump cash through the financial system and to businesses and households. Policymakers hoped the moves would stoke growth and power inflation towards their target of just below 2.0 percent.
But while economic expansion has accelerated in the 19-nation eurozone - hitting 2.4 percent last year according to ECB estimates - inflation has remained sluggish, reaching just 1.4 percent in December. There was a glimmer of good news for central bankers in an ECB survey of private-sector analysts also published Friday, which found forecasters had slightly upgraded their inflation expectations for the coming years. The professionals' predictions now see inflation hitting 1.5 percent this year, 1.7 percent in 2019 and 1.8 percent in 2020.
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