Euro zone business lending growth hit post-crisis high

FRANKFURT (Reuters) – Lending growth to euro zone companies surged to a post-crisis high last month, while a broader indicator of money circulating in the euro area, which often foreshadows future activity, surged unexpectedly, the European Central Bank said.

Lending growth to non-financial corporations accelerated to 4.1 in June from 3.7 percent in May, its fastest rate since mid-2009. Household lending growth meanwhile held steady at 2.9 percent, the ECB said in a regular monthly statement on Wednesday.

By purchasing 2.6 trillion euros ($3.04 trillion) worth of debt over nearly four years, the ECB has tried to hold down borrowing costs and stimulate lending, to rekindle growth and inflation.

While its efforts have mostly paid off, economic growth has softened in recent months and the expansion in lending has also appeared to ease, suggesting that the bloc’s growth cycle has peaked.

Still, unemployment is dropping and the threat of deflation has been warded off. That led the ECB to announce last month it would end the bond purchases this year, although interest rates will stay steady at least through the summer of 2019.

The annual growth rate of the M3 measure of money supply, which in part reflects the amount of cash pumped in by the ECB itself, surged to 4.4 percent, blowing past expectations for 4 percent and the previous month’s 4 percent reading.

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($1 = 0.8552 euros)

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