September 27, 2018 / 8:30 AM / 2 months ago

Euro zone lending growth edges higher to fresh post-crisis high

FILE PHOTO: The skyline with its financial district (L) and the headquarter of the European Central Bank (ECB,R) are photographed on early evening in Frankfurt, Germany, September 18, 2018. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - Lending growth to euro zone companies and households rose to another post-crisis high in August but an indicator of money circulating in the euro area, which often foreshadows future activity, dipped unexpectedly, the European Central Bank said on Thursday.

Lending growth to households accelerated to 3.1 percent in August from 3 percent a month earlier, the highest since early 2009, while corporate lending growth rose to 4.2 percent from 4 percent.

Purchasing 2.6 trillion euros worth of debt over nearly four years, the ECB has held down borrowing costs to stimulate lending and rekindle growth and inflation.

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

Still, with unemployment dropping and the threat of deflation warded off, the ECB remains on course to end its bond purchases this year and raise rates for the first time since 2011 sometime next autumn, satisfied that inflation will continue to rise even with reduced support.

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, eased to 3.5 percent from 4.0 percent a month earlier, short of expectations for 3.9 percent.

Reporting by Balazs Koranyi; Editing by Francesco Canepa

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