According to a report by Bert Colij, Senior Economist at Netherlands International Bank, the Eurozone’s July bank loan data demonstrates the continuing significance of monetary policy‘s impact. However, since this influence remains gradual, it should not be a game-changing factor for the European Central Bank‘s interest rate decision in September.
Broad money growth decreased from 0.6% in June to 0.4% in July.
In recent months, as lending demand weakened and the European Central Bank initiated quantitative tightening, money growth has been declining sharply.
However, Colij notes that the impact of rate hikes on the economy remains gradual and hasn’t generated any shocks (although future developments cannot be guaranteed).
He additionally points out that the subdued lending is still adding to expectations of Eurozone economic weakness over the next few quarters.
