FRANKFURT—Euro-zone bank-lending growth slowed sharply in December in annual terms compared with the previous month, data from the European Central Bank showed Friday. The data likely reflect continued uncertainties and no impact yet from the longest-ever loan the ECB offered in December to the region's banks.
Weak monetary developments have been reflecting the high levels of economic and financial market uncertainty, a result of the deepening of the euro-zone's sovereign-debt crisis since August, the ECB said in the latest monthly bulletin published last week.
The annual growth of the broad monetary aggregate known as M3 slowed in December to 1.6% compared with November's unrevised 2.0% growth rate. That is sharply slower than the median expectations of analysts in a Dow Jones Newswires poll for a growth rate of 2.1%.
Lending to the corporate sector and households probably provide a better picture of monetary developments than other monetary data. Bank-lending growth also slowed sharply as it increased 1.0% in December compared with the year-earlier period, after rising by an unrevised 1.7% in November, ECB data showed.
The data confirm that underlying money and credit growth has remained moderate, thus inflation is unlikely to pose a concern for the ECB at its February rate decision.
Analysts have noted that the likely positive impact on lending of banks' massive, nearly half-a-trillion-euro uptake of the ECB's longest-ever, three-year loan in December will only be visible in the money-growth data with some delay.
Banks' funding pressures intensified toward the end of last year as a result of limited issuance of longer-term debt securities and the withdrawal of deposits by non-euro-area residents, the ECB said in its monthly bulletin.
The nonstandard measures the ECB introduced in December—particularly the three-year longer-term refinancing operations—should alleviate these pressures, the ECB added.
