Eurozone Private Sector Credit Growth Rises In July
2024-08-24
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(fxcue news) - Eurozone private sector credit increased in July but the pace of growth remained weak as high interest rate continued to weigh on borrowing, official data revealed on Wednesday.
Adjusted loans to the private sector expanded 1.3 percent from a year ago in July, faster than the 1.1 percent rise in June, the European Central Bank reported.
Among the borrowing sectors, loans to households grew at a faster pace of 0.5 percent in July after a 0.3 percent rise in June. Meanwhile, growth in loans to non-financial corporations slowed slightly to 0.6 percent from 0.7 percent in the prior month.
Further, data showed that claims on the private sector gained 0.8 percent, the same rate as seen in June.
The broad money supply M3 posted a steady annual growth of 2.3 percent in July. At the same time, the narrow measure M1 decreased 3.1 percent compared to a fall of 3.4 percent in June.
ING economist Bert Colijn said July data suggests that high interest rates are still resulting in weak borrowing from both businesses and households.
"The somewhat lower rate environment will help to boost lending to some degree, but with a steady pace of ECB rate cuts already priced in, it seems unlikely that there will be a significant boost to borrowing from the ECB gently taking its foot off the monetary brake," the economist said.
Despite inflation remaining sticky, the ECB is widely expected to cut its key interest rates in September.
At the July policy meeting, the bank had kept the rates unchanged after lowering them for the first time in five years at the June meeting.
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