Household lending in the eurozone has increased the most since July 2009, and money supply growth has accelerated, data from the European Central Bank showed. Household lending grew by 3.4% year on year in July, which is slightly faster than growth by 3, 3% in June. This was the fastest growth since January 2009. Loans to non-financial corporations grew at a steady rate of 3.9%. Meanwhile, lending to the general government sector fell by -0.5%, while lending to the private sector fell to 2.9% from 3 , 1% in June. Adjusted loans to the private sector grew by 3.6%, which was slightly more than an increase of 3.5% in June. The broad money aggregate M3 grew in July by 5.2% year on year, faster than growth by 4.5% in June. Similarly, the growth of the M1 aggregate accelerated to 7.8% from 7.2%. M1 includes currency in circulation and overnight deposits. A decent increase in monetary aggregates should remove a sense of panic, says ING economist Peter Vanden Hout. “We continue to believe that the ECB will announce a rate cut and resumption of QE in September, but at the same time will take an important set of measures to avoid negative side effects for the banking sector that could clog the credit channel, ”the economist added. Information and Analytical Department of Teletrade
