Eurozone lending picks up

Businesses and households in the eurozone borrowed more in December, data released Friday by the European Central Bank showed, suggesting the institution's loose monetary policy is reaching the real economy. Loans to households grew at 2.0 percent year-on-year in the final month of 2016, correcting for some purely financial transactions - an increase of 0.1 percentage points over November's figure.
Meanwhile, growth in non-financial corporations' borrowing added 0.2 percentage points to reach 2.3 percent, more than recovering from a slight fall in the pace of growth in November.
The ECB will "particularly welcome" the news on business lending, IHS Markit economist Howard Archer wrote, noting that the measure reached a five-year high.
"This provides support to the ECB's claim that its monetary policy measures are working," he went on.
The Frankfurt institution has cut interest rates to record lows and buys tens of billions of government and corporate bonds every month.
It has also offered cheap loans to banks conditional on their lending on to households and businesses - even paying banks to take its money if they pass enough through to the real economy.
All its extraordinary monetary measures are aimed at boosting economic activity, driving inflation up towards the bank's target of just below 2.0 percent.
Friday's data will be seen by the ECB as "ongoing evidence that its monetary policy is providing valuable support to eurozone growth and should not be changed any time soon," Archer said.
With inflation still sluggish in November, ECB policymakers decided in December to extend mass bond-buying from March to December 2017 - although the pace will slow from 80 billion euros ($85 billion) to 60 billion euros per month from April.
Since then, data have shown a steep rise in inflation across the 19-nation eurozone, from 0.6 percent in November to 1.1 percent in December.
Voices in Germany, where inflation hit 1.7 percent last month, were immediately raised to call for an end to loose monetary policy.
But at his January press conference, ECB president Mario Draghi noted that December's rise in inflation was mostly down to energy prices, with core inflation still far from the target.
"The ECB will want to see sustained, decisive evidence that underlying inflationary pressures are picking up" before winding down its interventions, Archer predicted.