Eurozone Business Lending Slumps as ECB Keeps Rate Hike on Track

The European Central Bank (ECB) has reported a decline in business lending in the Eurozone, following its recent decision to raise borrowing costs. According to data released by the ECB on Thursday, adjusted loans to non-financial corporations in the private sector totalled just €22 billion in July, down from €27 billion in June and €34 billion in May.

The slowdown in lending comes after the ECB raised its deposit rate by 25 basis points to 2.25% in June, in response to inflationary pressures generated by the Middle East conflict and higher energy prices.

Despite the weaker monthly flow, the annual growth rate of adjusted lending to non-financial corporations accelerated to 4.4% in July from 4.0% in June.