Minor blow for ECB as lending to eurozone businesses slows

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Minor blow for ECB as lending to eurozone businesses slows
Overall lending to the eurozone's private sector expanded by 2.8 per cent last month, down from 2.9 per cent in November.

Frankfurt - While economic expansion has accelerated, inflation has remained sluggish

By AFP

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Published: Fri 26 Jan 2018, 8:56 PM

Last updated: Fri 26 Jan 2018, 10:57 PM

The pace of growth in lending to businesses in the eurozone slowed in December, European Central Bank data showed on Friday, in a mild setback for the Frankfurt institution.
Credit to businesses grew by 2.9 per cent year-on-year last month, adjusting for some purely financial transactions, a drop of 0.2 percentage points compared with the figure for November.
Meanwhile, lending growth to households held steady in December, at 2.8 per cent.
Overall, lending to the private sector expanded by 2.8 per cent last month, down from 2.9 per cent in November. Credit growth is a key indicator for the ECB of how its easy-money policy is affecting the real economy.
It has set interest rates at historic lows, offered cheap loans to banks and bought tens of billions of euros per month in bonds in a bid to pump cash through the financial system and to businesses and households. Policymakers hoped the moves would stoke growth and power inflation towards their target of just below two per cent.
But while economic expansion has accelerated in the 19-nation eurozone - hitting 2.4 per cent last year according to ECB estimates - inflation has remained sluggish, reaching just 1.4 per cent in December. There was a glimmer of good news for central bankers in an ECB survey of private-sector analysts also published on Friday, which found forecasters had slightly upgraded their inflation expectations for the coming years.
The professionals' predictions now see inflation hitting 1.5 per cent this year, 1.7 per cent in 2019 and 1.8 per cent in 2020.
In the longer term, the forecasters see inflation at around 1.9 per cent, exactly in line with the ECB's target.



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