Lending to eurozone households and businesses continued to grow at a steady rate in September, data from the European Central Bank showed Thursday.
The data indicate that underlying conditions for loan growth remain favorable but may be lower than the ECB hoped, suggesting that the central bank’s stimulus measures haven’t fully been transmitted into the economy. In fact, the current reading may even disappoint the ECB, analysts say.
Lending to households grew by 1.8% in September on the year, the same as in August, the ECB said. Lending to firms grew by 1.9% on the year, also maintaining the pace of the previous month.
The central bank’s M3 money supply indicator grew 5.0% on the year in September after 5.1% in August. Economists polled by The Wall Street Journal had expected growth of 5.1%.
The ECB hopes that its generous monetary policy stance, which includes large-scale assets purchases of ?80 billion ($87.2 billion) each month, and loans to banks designed to motivate them to lend on to the eurozone economy, will revive lending in the single currency area.
“The ECB will likely be disappointed overall with the September eurozone lending data, particularly that loans to non-financial businesses were only flat in September,” said Howard Archer, chief U.K. and European economist at IHS Global Insight.
The current batch of data might well underline market expectations that the ECB will add more stimulus to the existing ones at its December meeting.
“Flat loans to businesses in September fuels belief that the ECB is more likely than not to take further stimulative active in December,” Mr. Archer said.
Markets are increasingly positioning themselves for an extension of the ECB’s assets purchases by at least six months beyond the current March 2017 finishing date. Market participants also expect adjustment to the conditions of the purchase program to increase the pool of assets eligible for purchase, and thus, to avoid a growing scarcity of available bonds.