Eurozone Corporate Lending Growth Slows Amid Tightening Monetary Policy

Growth in corporate lending to eurozone businesses slowed in August, according to figures released by the European Central Bank on Friday. The 4.2% year-on-year increase in adjusted loans to non-financial corporations was down from 4.4% in July.

The monthly flow of new corporate lending also slowed sharply to €11bn from €22bn, suggesting that credit momentum was softening even before the ECB's latest rate increase took effect on September 16th.

The figures come against a backdrop of already tighter borrowing conditions. The central bank had raised its three key rates by 25 basis points earlier this month, taking the deposit facility rate to 2.50% after also hiking rates in June.

Higher interest rates typically feed through to more expensive corporate and household borrowing, which can discourage investment and consumption and ultimately slow economic activity.