Private Sector Loans Shrink 1.9 Percent in Europe

Lending to the euro zone’s private sector contracted further in July, dragging on the euro zone’s nascent economic recovery and keeping up pressure on the European Central Bank to maintain its expansive monetary policy.

Private sector loans shrank by 1.9 percent from the same month a year ago, ECB data released on Wednesday showed.

A breakdown of the region-wide figure, which matched the lowest reading in a Reuters poll of economists, showed declines were generally steeper on the euro zone’s struggling periphery, adding to evidence that the recovery is uneven.

The ECB has tied its ‘forward guidance’ on interest rates to the inflation outlook and monetary dynamics remaining subdued – a scenario that Wednesday’s data showed to be clearly intact.

via Reuters

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