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ECB policy triggers rise in eurozone bank lending

Lending to companies and households in the eurozone rose for a fourth month in February, signalling that the ECB’s record monetary stimulus is finally reaching the real economy.

Eurozone bank lending climbed 0.2% from January, the ECB said yesterday.

The run of monthly increases is the longest since October 2011.

The ECB used an array of instruments in recent years to encourage credit supply and bolster the region’s recovery. The latest sign that banks are becoming more confident in their ability to lend came from an allotment of targeted long-term loans last week that was higher than analysts forecast.

ECB president Mario Draghi has long pointed to cautious signs of improvement. He told European Parliament lawmakers on Monday that “the easing of lending conditions is progressing hand-in-hand with a resurgent demand for credit to finance business investment” that will increase potential output in the longer term.

“Interest-rate reductions are being transmitted to the whole financial intermediation channel and credit shrinkage is receding,” he said in Rome yesterday.

“The falling cost of financing makes investment opportunities that in the past were not profitable interesting,” he said.

Article Source: http://tinyurl.com/kbwqb42


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