Eurozone credit growth picked up in October – ECB

Bank loans to the private sector in the eurozone picked up in October, the European Central Bank said yesterday, suggesting the financial sector is slowly returning to normal.

Lending rose 1.4 per cent in October compared to the same period last year, after a gain of 1.2 per cent in September, provisional ECB data showed.

Loans to households rose by 2.9 per cent but corporate loans shrank by 0.6 per cent, the same result as last month.

Michael Schubert, an analyst from Commerzbank, said the latter figure would likely be a “disappointment” for the ECB, who said in its November monthly report it was expecting a “turning point” in loans to business this year.

Meanwhile, the ECB said eurozone money supply grew by one per cent in October on an annual basis, compared to 1.1 per cent last month. The ECB regards this figure as a key guide to pressures likely to affect inflation in the medium term.

“We therefore do not see any inflationary pressure from the monetary side,” said Fabienne Riefer from Postbank research.

The ECB has kept its key interest rate at a historic low of one per cent since May last year and economists do not expect a change in the near future.