The Strategist

Growth of bank lending in the euro area slows in May

06/29/2023 - 10:48

The expansion of bank lending in the euro area slowed down in May as a result of increased interest rates and the manufacturing sector recession, according to ECB data issued on Wednesday.

The ECB is hiking rates at the fastest rate in its history this year in an effort to combat inflation. Credit demand is being reduced as a result, which is affecting all aspects of the economy, including the housing market, construction industry, and consumer spending.

Credit growth for businesses in the euro area fell from 4.6% in April to 4.0% in May, and credit growth for households fell from 2.5% to 2.1%.

The M3 monetary aggregate's growth fell from 1.9% in the previous quarter to 1.4% now. Reuters polled economists, who predicted that M3 would increase by 1.5% in May 2023.