2019.08.2805:01:00UTC+00Eurozone Household Lending Growth Fastest Since 2009

Eurozone bank lending to households increased the most since early 2009 in July and money supply growth accelerated, data from the European Central Bank showed Wednesday.

Loans to households rose 3.4 percent year-on-year in July, slightly faster than the 3.3 percent increase in June. This was the fastest growth since January 2009.

Loans to non-financial corporations grew at a steady pace of 3.9 percent.

Meanwhile, credit to general government dropped 0.5 percent and growth in credit to the private sector eased to 2.9 percent from 3.1 percent in June.

Adjusted loans to the private sector grew 3.6 percent, which was slightly bigger than the 3.5 percent increase in June.

The broad monetary aggregate M3 climbed 5.2 percent year-on-year in July, faster than the 4.5 percent increase in June.

Likewise, growth in M1 accelerated to 7.8 percent from 7.2 percent. M1 comprises currency in circulation and overnight deposits.

The decent growth in monetary aggregates should take away the sense of panic, Peter Vanden Houte, an ING economist, said.

"We still believe the ECB will announce a rate cut and a restart of QE in September, but at the same time, an important set of measures will have to be introduced to avoid the negative side-effects on the banking sector clog the credit channel," the economist added.