Eurozone Corporate Lending Growth Slows Amid Higher Interest Rates
The growth of corporate lending in the eurozone slowed down in August, according to figures from the European Central Bank. Adjusted loans to non-financial corporations rose by 4.2% year-on-year, a decrease from the previous month's 4.4%. The monthly flow of new corporate lending also slowed sharply to €11bn from €22bn.
Lending to households grew at an annual rate of 3.1%, unchanged from July. However, the monthly flow of household lending decreased to €19bn. These figures predate the ECB's latest interest rate hike, which took effect on September 16.
The increase in borrowing costs is likely to weigh on credit demand and slow down economic activity. Higher interest rates can discourage investment and consumption, ultimately affecting growth.