Euro zone lending continues to grow but money supply slows
Euro zone lending continued to grow at a steady pace in June while a money supply indicator, which often foreshadows future activity, lost pace, data from the European Central Bank showed today.
Household lending expanded by 3.3%, keeping a steady growth pace for the fifth month in a row, and corporate lending grew by 3.8%, in line with May.
This suggested that the recent economic slowdown has yet to significantly dent bank lending.
But with economic growth slowing sharply this year on weak export demand for manufactured goods, the ECB has already flagged more policy easing and the only question is whether it pulls the trigger at tomorrow’s policy meeting or wait until September.
While market expectations for policy action are split, some point out that the economy has appeared to stabilise with confidence indicators steadying, unemployment still falling and the ECB’s own lending survey pointing to modest but steady activity ahead.
The annual growth rate of the M3 measure of money supply, which often foreshadows future activity, grew by 4.5% in June after 4.8% in May, trailing forecasts for 4.7%.
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