FRANKFURT (Reuters) – Growth in euro zone business loans slowed in January for the third consecutive month, while cash deposits fell for the first time due to rapid central bank rate hikes, data show. European Central Bank (ECB) data released Monday.
Business loan growth rose to 6.1% in January from 6.3% the previous month, while household credit growth slowed to 3.6% from 3.8%.
The ECB’s M1 index (the amount of coins and notes in circulation and demand deposits), which is a good leading indicator of future activity, fell 0.7%, the first negative figure never recorded.
“Tightening efforts have a clear effect on money supply and private sector borrowing, which will have a dampening impact on economic growth and inflation in 2023,” said Bert Colijn, economist at ING.
An earlier ECB survey showed banks had already tightened access to credit in the fourth quarter, the worst since the European Union’s debt crisis a decade ago, by planning further lending policies more restrictive for the new quarter which will end on March 31.
The monthly flow of corporate loans reached only 2 billion euros, but this is an improvement from the -25 billion euros recorded in December.
The annual growth rate of M3 money supply, which reflects the cash circulating in the eurozone economy, slowed to 3.5% from 4.1% in December, below the Reuters consensus, which gave it at 3.9%.
(Report Balazs Koranyi; Lina Golovnya, edited by Kate Entringer)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
