Loan growth to eurozone firms picks up

FRANKFURT: Growth in lending to companies in the eurozone picked up in May, official data showed, a bright spot in the data as fears of economic slowdown intensify.

Adjusted for some purely financial transactions, the pace of growth in credit to firms picked up to 3.6% year-on-year last month, up from 3.3% in April, the European Central Bank (ECB) said in a data release.

Growth in lending to households was flat at 2.9%, also in adjusted figures.

That meant firms accounted for most of the increase in the pace of credit growth last month, from 3% to 3.3%.

Economists watch loan growth closely, as more cash flowing into the economy points to an increase in activity.

ECB policymakers are particularly alert to new data following their decision this month to dismantle a key pillar of their support to the eurozone by the end of the year.

Aiming to boost growth and stoke inflation to the target of just below 2%, the Frankfurt institution has set interest rates

� at historic lows and buys 30bil (US$35bil) of government and corporate bonds per month.

Both policies are designed to pump cash through the financial system and into the real economy, where it can power investments, hiring and consumer spending.

But from October, the ECB will reduce pur

� chases to 15bil per month before ending them completely in December,saying the move is justified as inflation is on a solid path towards its goal.

Keenly aware that growth slowed in early 2018 from the intense pace seen late last year, President Mario Draghi nevertheless left the bank’s options open to slow its exit if economic conditions worsen. — AFP