The growth of credit granted to the private sector in the euro zone continued to fall in February, even before fears about the banking sector that could accentuate the tightening of credit conditions returned, the European Central Bank said on Monday.
Credit to the private sector, adjusted for certain strictly financial operations, increased by 4.3% in one year, that is, for the fifth consecutive month, downwards in a context of rising rates that is causing a slowdown in the demand for credit.
This trend should continue in the coming months and “could also be influenced by the recent global banking turmoil,” say analysts at ING bank.
The bankruptcy of California’s Silicon Valley Bank (SVB) on March 10, like the forced takeover of Credit Suisse by UBS, raised concerns about the soundness of the banking sector in the United States and Europe.
The ECB did not tremble
In this context, the ECB did not flinch when raising its rates again in March.
The accumulated increase has reached 3.5 basis points since July, in an attempt to calm the high inflation after the Russian war in Ukraine.
The ECB scenario of a return of inflation to around 2% in 2025, compared to more than 8% in February, shows that there is “a way to go to contain inflationary pressures,” its president, Christine, stressed last week. Lagarde.
Monetary tightening is having its effects on bank credit: loans granted to companies slowed down their growth in January to 5.7% year-on-year, compared to almost 9% four months earlier.
The growth of loans granted to households also slowed down, to 3.2%, compared to 4.5% last summer.
In this group, housing loans decreased in volume by 1.0%.
In February, the narrow money supply (M1), a leading indicator of growth that includes demand deposits, accelerated its fall to 2.7% year-on-year, according to the ECB.
Private players transfer their demand deposits to less liquid, interest-bearing savings, such as the Livret A in France.
These sums are generally not earmarked for consumption, which should weigh on growth.
Source: BFM TV
