Pace of eurozone lending edges higher in April: ECB

FRANKFURT: The rate of growth in eurozone bank loans to the private sector increased slightly in April, the European Central bank said on Friday, signalling sustained demand that should underpin growth.

Lending increased by 2.6 percent from the level in the same month last year, a little better than the rate of 2.5 percent in March, an ECB spokesman said.

But the central bank also said that eurozone money supply as measured by its M3 indicator grew by 2.0 percent in April, a rate that was lower than the increase of 2.3 percent the previous month. 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 incite the ECB to hike interest rates.

The central bank raised its key interest rate to 1.25 percent in April, and economist believe it could reach 1.75 to 2.0 percent by the end of the year.

Copyright APP (Associated Press of Pakistan), 2011

Copyright AFP (Agence France-Presse), 2011