Growth in lending to eurozone businesses jumps in October

FRANKFURT AM MAIN: The pace of growth in lending to eurozone businesses picked up sharply in October, data released by the European Central Bank showed Tuesday, suggesting lenders and companies remain confident.

Credit to businesses added 2.9 percent year-on-year last month, adjusting for some purely financial transactions, a 0.5-percentage-point increase compared with September's rate.

The pickup in lending growth to firms accounted for all of an acceleration in overall private sector loan growth, which added 0.2 percentage points to reach 2.9 percent.

Meanwhile, growth in credit to households held at 2.7 percent in October, the same pace as in the two previous months.

Lending growth is seen as an important indicator of the effectiveness of the ECB's unconventional stimulus measures -- designed to boost economic growth and inflation with cheap credit.

With cheap loans to banks, record low interest rates and monthly bond purchases of 60 billion euros ($71 billion), policymakers have sought to pump cash through the financial system and into the real economy of companies and households.

Economic growth has picked up in the 19-nation eurozone since the ECB's interventions began, prompting president Mario Draghi to announce last month that it would reduce its support by halving its monthly bond buys from January.

But the Frankfurt institution has left its options open for the future of the programme, as inflation remains well short of its target of just below 2.0 percent -- slowing to 1.4 percent in October.

Growth in the eurozone's overall money supply, known as M3, also slowed slightly in October to 5.0 percent year-on-year.

The ECB uses growth in M3 as an indicator for future price growth.