Growth in eurozone private sector picks up slightly: ECB
Growth of loans to the private sector in the euro area picked up fractionally in January, European Central Bank data showed on Thursday. For the ECB, the statistics are a key indicator of economic health of the single currency area, as borrowing is a main financing source for corporate investment which in turn should boost the eurozone's currently weak economy.
In January, approved loans rose 0.8 percent from a year ago, fractionally faster than growth of 0.7 percent in December, an ECB statement said. When certain strictly financial transactions are stripped out from the loans data, the trend remained the same -- with credit accorded to households and companies up 0.6 percent in January, compared with 0.4 percent in December. The ECB has launched a raft of policy measures to get credit flowing, most significantly a massive programme to buy more than one trillion euros ($1.1 trillion) worth of public sector bonds to pump liquidity into the system.
The ECB already extended that programme by a further six months in a bid to drive eurozone inflation higher.
But ECB chief Mario Draghi has hinted that more stimulus measures could be on the cards in March if eurozone inflation does not pick up soon. Growth in the overall money supply, known as M3, accelerated to 5.0 percent in January from 4.7 percent in December, the ECB also said Thursday. The ECB regards M3 money supply as a barometer for future inflation.
Euro-area consumer prices rose less than initially estimated in January, increasing the pressure on the European Central Bank to take steps to sustain the region's recovery. The inflation rate was 0.3 percent, less than the 0.4 percent reported on Jan. 29, data from the European Union's statistics office showed on Thursday. ECB policy makers will review their stimulus package at a monetary-policy meeting on March 9-10, when they'll also release revised economic projections.
A commodity slump and a China-led emerging-market slowdown are weighing on global growth and damping price pressures. That's making the ECB's medium-term inflation goal of just under 2 percent harder to achieve, despite unprecedented measures including negative interest rates and a 1.5 trillion-euro ($1.7 trillion) bond-buying program.
While the revision wasn't major, persistent weakness "probably hurts long-term inflation expectations," said Jean-Francois Perrin, an inflation strategist at Credit Agricole SA's corporate and investment bank unit in Paris.
"It means clearly the ECB is not fulfilling its mandate in regard to inflation right now." The euro fluctuated after the report and was little changed at $1.1019 at 11:39 a.m. Frankfurt time. While inflation in January was still higher than the 0.2 percent registered the previous month, policy makers have said the rate may turn negative in coming months. Core prices, which strip out volatile components such as fuel, rose an annual 1 percent last month from 0.9 percent in December, Eurostat said. Energy costs declined 5.4 percent. An initial estimate for this month's inflation is due on Feb. 29.