FRANKFURT--Lending to eurozone households and businesses grew at a steady rate in August, data from the European Central Bank showed Tuesday. The data suggest that while underlying trends in both loan growth and money supply remain conducive to growth, there are limits to the extent to which the ECB can boost output with its monetary policy tools. Lending to households grew by 1.8% on the year, matching the previous month, while lending to firms grew by 1.9%, also matching the previous month. "This indicates that uncertainty has caused businesses and consumers to be a little more risk-averse in August, putting a dent in the recovery of loan growth and putting pressure on GDP growth in the third quarter," said Bert Colijn, a senior economist at ING. The ECB is hoping that its generous monetary policy, which includes large-scale asset purchases and loans to banks designed to motivate them to lend on to the eurozone economy, will revive lending in the currency bloc. Mr. Colijn said, however, that despite the bond-purchase program "the growth in eurozone borrowing remains rather weak, though, showing only limited impact of the program thus far." The central bank's broad money supply indicator M3 grew by 5.1% on the year in August, beating analysts' expectations in a Wall Street Journal survey of 4.9%. In monthly terms, lending to households grew by EUR7 billion in August, after EUR9 billion in the previous month, while lending to firms declined by EUR1 billion in August, after EUR11 billion growth. "In our view, the broader trend in the data remains positive," said J.P. Morgan economist Greg Fuzesi. ECB President Mario Draghi said Monday that the transmission of monetary policy to the real economy is working at the present time. Speaking in Brussels, the ECB chief said that the "transmission of policy never worked better than it does today." The data aren't likely to sway the ECB from an additional expansion of its policy near the end of the year, say analysts. "The August lending and money supply data will likely do little to change belief that the ECB is set to sit tight at its October meeting but could well enact some modest further stimulus in December," said Howard Archer of IHS Markit in a note. "It looks unlikely that the ECB will act before December given that it indicated at its September meeting that it is pretty firmly in 'wait-and-see mode,'" he added. The central bank's narrow money supply measure M1, which includes currency in circulation and overnight deposits, stood at 8.9% annual growth in August after 8.4% in July. This points to "solid growth momentum in the economy," said Mr. Fuzesi.

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