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Euro zone credit growth rises again, despite gloomy outlook

Published 10/26/2022, 04:22 AM
Updated 10/26/2022, 04:26 AM
© Reuters. FILE PHOTO: Signage is seen outside the European Central Bank (ECB) building, in Frankfurt, Germany, July 21, 2022. REUTERS/Wolfgang Rattay

© Reuters. FILE PHOTO: Signage is seen outside the European Central Bank (ECB) building, in Frankfurt, Germany, July 21, 2022. REUTERS/Wolfgang Rattay

FRANKFURT (Reuters) - Bank lending to euro zone companies accelerated further in September, extending the sector's biggest borrowing binge in over a decade, despite rising interest rates and a looming recession, European Central Bank data showed on Wednesday.

Lending to businesses in the 19-country euro area expanded by 8.9% in September, its fastest pace since early 2009, beating an 8.8% reading a month earlier. Household credit growth meanwhile slowed to 4.4% from 4.5%, fresh data showed.

The monthly flow of loans to companies, however, slowed sharply, dropping to 27.3 billion euros in September from 68.2 billion euros a month earlier.

Credit growth has been robust this year even as banks tightened access to funds, partly reflecting firms’ increased need for liquidity to cover inflated energy costs.

© Reuters. FILE PHOTO: Signage is seen outside the European Central Bank (ECB) building, in Frankfurt, Germany, July 21, 2022. REUTERS/Wolfgang Rattay

But credit demand is expected to fall in the fourth quarter across all sectors as interest rates rise further, the economy enters a recession and firms claw back investments, an ECB survey showed on Tuesday.

Growth in the M3 measure of money circulating in the euro zone, meanwhile, accelerated to 6.3% from 6.1%, outpacing expectations for 6.1% in a Reuters survey.

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