FX.co ★ Eurozone Private Sector Credit Growth Remains Weak

In April, the Eurozone's private sector credit growth continued to falter, despite experiencing the swiftest increase in money supply over the past year, according to data released by the European Central Bank on Wednesday.

Credit claims within the private sector rose by an annual rate of 0.7%, down slightly from the previous 0.8% increase. Conversely, adjusted loans to the private sector grew marginally faster at 0.9%, up from March's 0.8% rise.

Focusing on specific borrowing sectors, the annual growth rate of adjusted loans to households remained stagnant at 0.2% in April, marking the slowest growth since early 2015. Simultaneously, the growth rate of adjusted loans to non-financial corporations decelerated to 0.3% from March's 0.4%.

The broad monetary aggregate M3 expanded by 1.3% year-on-year in April, surpassing the 0.9% growth seen in March and achieving the fastest pace since April 2023. However, the narrow measure M1 continued its decline, dropping 6.0% annually after a 6.6% decrease in March.

Over the three months leading to April, M3's growth averaged 0.8%.

ING economist Bert Colijn commented that the monetary climate in the euro area remains restrictive. He indicated that the European Central Bank is widely anticipated to cut interest rates by 0.25% in their upcoming meeting, barring any unforeseen events. Colijn also anticipates the potential for another rate cut at the ECB's September meeting.