Loans to businesses declining for the first time since 2015, confirming that the ECB's restrictive policy is affecting the lifeblood of the economy, but the fighting inflation has priority and the Eurotower does not foresee monetary easing in the short term. The data published yesterday by the ECB are a warning for the Eurozone economy which is seriously at risk recession.
Loans to businesses in decline
In October, i business loans non-financial companies have registered a contraction of 0.3%, the first since 2015, which compares with growth of 0.2% reported in September of 0.7% reported in August, 2.2% in July and 3% in June.
A trend that confirms a progressive slowdown during the third quarter of the year and which affects the very engine of economic growth, businesses, since loans to families show a less marked slowdown.
Financing for families is slowing down
They also brake financing for familieswhose annualized growth rate stabilizes in October at 0.6% from 0.8% in September.
More worrying is the massive one slowdown in the quantity of money in circulation or M1 monetary mass (M2 the most complete measure) which recorded a -10% from the previous -9.9% and the M3 money supply, which also includes postal deposits and passbooks, considered a good indicator of future economic growth, which marks -1% from the previous -1.2%. Here for .
ECB will not cut rates in 2024
Despite these somewhat alarming data, which herald the arrival of a recession in the Eurozone, the ECB maintains an austere attitude and categorically excludes a possible rate cut in 2024.
After President Lagarde also the governor of the Bundesbank. Joachim Nagel ruled out this possibility, stating that “inflation remained too high for too long and therefore it is too early to declare victory over inflation”.
“Monetary policy must stay the course,” the German banker reiterated, confirming a hawkish approach to monetary policy and reiterating that i interest rates are “currently at levels that will make a substantial contribution to the timely return of inflation to target. But it is necessary that these levels are maintained for a sufficiently long period“.
“This does not necessarily mean that the current cycle of increases is now over. Of course, it could be that, if the inflation outlook worsens, we may have to raise rates again”Nagel clarified, repeating what Lagarde said the day before and adding “it would therefore be premature to lower interest rates soon or speculate on such measures”.
The President of the Eurotower he had said the day before that “this is not the time to sing victory” against inflation, but “we must remain alert to the different forces affecting inflation and firmly focused on our price stability mandate.” “We expect that keep rates at current levels long enough – he reiterated – it will make a significant contribution to restoring price stability”.
