Europe Loan Growth Slowed
In June, growth in loans to companies and households in the 17-nation euro area slowed. It happened due damped demand for credit and the region’s fiscal crisis weighed on economic expansion. Today, the Central Bank said after advancing an annual 2.7 percent in May, loans to the private sector rose 2.5 percent from a year earlier. In May, the rate of growth in M3 money supply slowed from 2.5 percent to 2.1 percent. M3 is the Frankfurt-based ECB uses as a gauge of future inflation.
An economist at Commerzbank AG in Frankfurt Christoph Balz said “Loan growth has recovered but remains low in a historical comparison.” He added “because in the euro area as a whole, economic growth isn’t overly robust.” In this month The ECB lifted its benchmark interest rate to 1.5 percent. The euro-region economy will grow 1.9 percent this year, the bank predicts. The ECB said from the same period a year earlier, M3 climbed 2.2 percent in the three months through June.
M3 is the broadest gauge of money supply and includes money-market holdings, cash in circulation, and some forms of savings. A Bloomberg survey of economists shows Euro-area inflation probably held at 2.7 percent in July. The European Union’s statistics office in Luxembourg Eurostat is scheduled to release that data on July 29.
