Corporate lending in the Eurozone increased in July at the slowest rate in two years, according to the latest data, reflecting the European Central Bank’s (ECB) efforts to curb consumption and inflation through higher borrowing costs.
In July, bank lending to companies rose by 2.2 percent compared to the same month last year, the weakest growth since May 2021. In June, it had increased by three percent.
Household loans grew by 1.3 percent, following a 1.7 percent increase in the previous month.
The ECB raised interest rates in the Eurozone by 4.25 percentage points in July last year to combat inflation. Since the beginning of the month, the refinancing rate for banks stands at 4.25 percent, while the overnight deposit rate for banks is 3.75 percent.
For overnight loans, commercial banks pay an interest rate of 4.5 percent.
Core inflation is still too high, they warned at a meeting at the end of July, adding that financing conditions have tightened and are increasingly dampening demand, ‘which is an important factor in bringing inflation down to the targeted level’ of around two percent over the next three years.
In July, inflation in the Eurozone slipped to 5.3 percent, while core inflation, which excludes food and energy prices, stood at 6.6 percent.
The estimate for August will be published on Thursday.
The money supply in the Eurozone, measured by the M3 indicator, decreased in July for the first time in nearly 13 years, by 0.4 percent. In June, it had increased by 0.6 percent, according to the ECB report published on Monday.
