Eurozone M3 Growth Improves; Private Sector Credit Rises At Faster Pace

Eurozone money supply logged a faster growth and private sector credit growth accelerated, data from the European Central Bank showed on Thursday.

The broad monetary aggregate M3 climbed 0.4 percent annually, much faster than the 0.1 percent rise in January. This was the third consecutive rise and also the fastest since last June.

The annual growth rate of credit to the private sector increased to 0.7 percent in February from 0.4 percent in January. Likewise, adjusted loans to the private sector grew 0.7 percent annually, following last month’s 0.4 percent rise.

Among the borrowing sectors, the annual growth rate of adjusted loans to households held steady at 0.3 percent in February. Meanwhile, growth in loans to non-financial corporations doubled to 0.4 percent from 0.2 percent.

For the European Central Bank, data shows that at the current pace of lending, investment will remain very muted, ING economist Bert Colijn said.

Capital Economics’ economist Jack Allen-Reynolds said interest rate cuts in the second half of the year should cause net lending growth to pick up. However, rate cuts later in the year will lead to only a gradual rebound.

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