Euro zone economy picks up pace of borrowing in November

The European Central Bank has offered cheap loans to banks, set interest rates at historic lows and pumped €2.2 trillion into the financial system through bond-buying. (AFP)

FRANKFURT: Growth in lending to euro zone businesses and households picked up in November, official data showed Friday, in an encouraging sign for European Central Bank chiefs as they begin withdrawing support for the economy.
The pace of growth in loans to the private sector added 0.1 percentage points last month to reach 2.9 percent year-on-year, according to European Central Bank figures adjusted for some purely financial transactions.
Central bank governors watch loan growth closely as an indicator of whether policies designed to stimulate growth and inflation in the 19-nation single currency area are working.
A breakdown of the figures showed that growth in credit to households inched up by 0.1 percentage points, reaching 2.8 percent in November.
Meanwhile, expansion of lending to businesses picked up further after a leap in October, adding 0.2 percentage points last month to reach 3.1 percent year-on-year.
The ECB has offered cheap loans to banks, set interest rates at historic lows and pumped €2.2 trillion into the financial system through bond-buying, hoping to power growth and boost inflation to its target of just below 2.0 percent.
Growth has picked up as the euro zone economy recovers from the aftershocks of the financial crisis, prompting policymakers’ October decision to slash their monthly bond purchases by half from January, to €30 billion.
But inflation remains stubbornly short of the central bank target, with ECB chiefs prepared to reopen the cash floodgates if it falls too far.