The European Central Bank (ECB) published the monthly changes in corporate and consumer loans for October 20222.
Accordingly, corporate loans, which grew by 8.9 percent on an annual basis in September, increased by 8.9 percent in October. This rate was recorded as the strongest increase since the beginning of 2009.
Consumer loans also increased by 4.2 percent compared to the same period of 2021.
In October, the M3 money supply increased by 5.1 percent year-on-year, below the 6.2 percent expected by analysts. In September, the increase was 6.3 percent.
The slow growth in the M3 money supply is considered as an indicator that the rate of increase in inflation may slow down in the future.
The continued strong growth in bank loans indicates that the loan supply in the Euro Area is still in good condition. This is also considered an important consideration when designing the future interest rate policy of the European Central Bank (ECB).
On the other hand, the inflation outlook will determine how far and how fast the ECB will go with regard to rate hikes.
Currently, most economists expect the ECB to raise main interest rates by 0.50 percentage points on December 15.
The ECB will also decide on the future of interest rates at its December meeting.
The ECB, which increased by 50 basis points in the first of the last 3 meetings and 75 basis points in the next two meetings, increased the interest rates by 200 basis points in total after the increase cycle.
In the Eurozone, annual inflation in October reached 10.6 percent, the highest level on record, driven by the rise in energy prices.
Inflation in the Eurozone is expected to remain above the ECB’s 2 percent target until 2024.