With the European Central Bank set to pump more money into the eurozone economy from this week, the latest bank loan statistics may bring some small cheer to the ECB’s policymakers.
In February lending to companies and households in the region increased by 0.9 percent year-on-year – its fastest pace in over four years.
But analyst Nick Parsons, Global Head of FX Strategy at National Australia Bank, says we need a lot more: “Any increase in bank lending is probably going to be welcomed by the ECB, whether or not it is going to have any real economic impact is a entirely different question altogether. And certainly the evidence thus far would say the increase in economic activity is, at best, really marginal.”
Household lending growth picked up from 1.4 percent in January to 1.6 percent, led by mortgages and consumer credit.
While an increase in business loans to non-financial corporations – at 0.9 percent from 0.6 percent a month earlier – showed the recovery that started in 2014 continues – albeit sluggish and uneven.
However, what the ECB is most worried about is inflation and the latest forecasts from economists are for tepid price growth, just 0.3 percent this year.
It has certainly started poorly with consumer prices in the currency bloc falling by 0.2 percent in February and expected to have slipped by 0.1 percent in March as a protracted slide in oil prices since 2014 has started to filter through to other goods and services.