FRANKFURT: Bank lending to private households in the euro area, which has practically dried up in recent months, remains very subdued in face of the region's crippling debt crisis, data showed on Thursday.
Eurozone bank loans to the private sector declined by 0.6 percent in August compared with the same period last year after shrinking by 0.4 percent the previous month, the European Central Bank said in a statement.
President Mario Draghi said at his most recent news conference earlier this month that weak lending to the private sector reflected a pessimistic view of eurozone growth prospects and "heightened risk aversion" amid the crisis.
In a bid to boost lending in the embattled 17-member bloc, the ECB offered banks more than 1.0 trillion euros ($1.3 trillion) in ultra-cheap long-term loans but the operation appears to have been less effective than Draghi hoped.
"Tight credit conditions are handicapping eurozone growth prospects," warned Howard Archer from IHS Global Insight.
The ECB also published eurozone money supply data, which suggest the money supply -- a key guide to future inflation -- is growing less strongly than expected, possibly pointing to an interest rate cut next week.
Growth in the M3 indicator, which measures the amount of money in circulation and deposited with banks, slowed to an annual 2.9 percent in August, from 3.6 percent in July.
Analysts surveyed by Dow Jones Newswires had expected a less pronounced slowdown to 3.2 percent.
The ECB regards the M3 figure as a key guide to inflation pressures and uses it to set interest rates accordingly.
Some economists have suggested the bank might cut interest rates at its next meeting on October 4 and say subdued inflationary pressure makes this more likely.
Comments
Comments are closed.