Growth in lending to the eurozone’s private sector slowed in November, the first month after the European Central Bank re-launched its controversial bond-buying scheme, data from the Frankfurt institution showed on Friday. Credit grew by 3.6 per cent year-on-year in November, a pace 0.1 percentage points below October’s reading, the ECB said in figures adjusted for some purely financial transactions. Growth in lending to businesses fell back to 3.4 per cent — down 0.4 points — while the rate of expansion in credit to households was steady at 3.5 per cent. In the final monetary policy shift under former ECB president Mario Draghi, governors decided last year to re-launch their ‘quantitative easing’ (QE) bond-buying scheme at 20 billion euros ($22.3 billion) per month from November. Amounting to 2.6 trillion euros in 2015-18, the scheme was designed to pump cash through the financial system and encourage lending, in turn stimulating growth and inflation. But the decision to re-launch QE prompted rarely-seen public splits in the ECB’s governing council, with national central bank chiefs giving angry newspaper interviews and a German board member quitting in its wake. Opponents say that while inflation continues to fall short of the ECB’s just-below-2.0-percent target, it is far from the risk of deflation — a harmful downward spiral of prices and activity — that justified starting QE in 2015. New ECB chief Christine Lagarde has made knitting together divisions her top priority, but policy — including monthly bond purchases — is likely to remain on hold while the bank completes its first ‘strategic review’ since 2003.
Source – New Age
