FX.co ★ Eurozone Private Sector Credit Growth Remains Weak

The Eurozone private sector saw a continued increase in credit during March, however, the speed of recovery remained sluggish, according to data released by the European Central Bank.

Year on year, claims on the private sector saw a slight acceleration, with a 0.8 percent increase compared to the 0.7 percent increase reported in February. Similarly, adjusted loans to the private sector also experienced a growth rate of 0.8 percent, maintaining the upward trend seen in February.

However, among the borrowing sectors, there was a slight slow down. Annual growth in adjusted loans to households dropped to 0.2 percent from 0.3 percent. In contrast, non-financial corporations saw their loans grow at a faster pace, up 0.4 percent after a 0.3 percent rise.

Additionally, the data revealed that the broad monetary aggregate, known as M3, saw an increase of 0.9 percent in March, outpacing the 0.4 percent rise witnessed in February. Meanwhile, the narrow measure, M1, recorded an annual decline of 6.7 percent, which reflects an improvement from the 7.8 percent decrease seen previously.

Bert Colijn, an economist at ING, suggested that the March data reveals a muted recovery in bank lending and money growth. With falling inflation expectations, this data is consistent with the initiation of cautious rate cuts.