Bank lending to businesses and households in the eurozone slowed again in April, continuing a steady decline that began last fall when the economy stalled and rapidly rising interest rates dampened demand for credit, according to central bank data. European Union (ECB) published on Tuesday. .
Business credit in the currency bloc increased by 4.6% year-on-year, after rising 5.2% in March, while the growth of credit to households slowed to 2.5% after +2.9% on last month.
Two more rate hikes expected
Many members of the institution and financial investors expect two more rate increases in the coming months, which would bring the deposit rate to 3.75% in July. Core inflation remains at very high levels, due to strong demand for services, a sector less affected by the rate hike.
Banks have already warned that they plan to further restrict access to credit this quarter, given rising financing costs and general caution due to weak economic growth. New loans to households represented only two billion euros in April. Those of companies fell by two billion.
The M3 money supply, a broader measure of the evolution of money flows in the economy, registered growth of 1.9% in April compared to +2.5% in the previous month, below the Reuters consensus of 2.1%.
Source: BFM TV
