Eurozone Lending To Private Sector Strengthens

(RTTNews) - Lending to the euro area private sector increased at a faster pace in January as interest rate cuts boosted demand for loans from businesses and households, data from the European Central Bank revealed Thursday.

Claims on the private sector expanded 2.0 percent from a year ago, faster than the 1.7 percent rise in December. Similarly, adjusted loans to the private sector registered 2.3 percent growth after increasing 2.0 percent in December.

Among the borrowing sectors, lending to businesses increased 2.0 percent from a year ago, after rising 1.7 percent in December. This was the fastest growth since July 2023, when lending advanced 2.3 percent.

Adjusted loans to households moved up 1.3 percent after rising 1.1 percent in December, data showed. A similar faster growth was last reported in July 2023.

The broad money supply M3 growth improved to 3.6 percent from 3.4 percent in December. Likewise, growth in narrow measure M1 accelerated to 2.7 percent from 1.8 percent.

In the three months up to January, M3 growth averaged 3.6 percent.

Short-term deposits other than overnight deposits logged a slower annual growth of 3.3 percent in January compared to 4.4 percent in December. The annual growth rate of marketable instruments softened to 14.7 percent from 15.8 percent a month ago.

Last month, the ECB had lowered its interest rates for a fourth policy session as inflation is expected to return to target over the course of the year. The deposit rate was lowered by 25 basis points to 2.75 percent, which was the lowest since February 2023.