Daily Management Review

Economists See ‘Inflation Recovery’ In Euro-Zone Loans’ Sector As ‘Fragile’ & Not As A Sustainable Trend


01/29/2017


Fresh data show acceleration in the loans’ sector of euro-zone, thanks to cheap cash of ECB.



Towards the end of this week, “freshly required data” revealed that the lending sector on euro-zone seems to have picked up to “multi-year highs in December”. It is an indication that the cheap cash of European Central Bank is setting its foot in the economy, even if it may not be “fast enough for policy” for policy to solidify soon.
 
ECB has slashed down rates to negative in the hope of reviving “lending” for the “growth and inflation” of fuel, whereby banks were given “free loans” which purchased “1.5 trillion euros' worth of assets” marking “record lows” for costs of burrowing. Last December, euro-zone’s inflation rate reached “1.1 percent” while in the previous month of November it hovered on “0.6 percent”, resulting in the “hawks” to have “argued for reduced stimulus”.
 
However, for the President of ECB, Mario Draghi, the recovering surge of inflation was not convincing to be “sustainable”; therefore no talks have been carried out on the matter of putting an end to the “bank's policy of easy money”. Essen based National Bank’s economist, Dirk Gojny is of the opinion that:
“It's good that banks are lending more to companies. But the whole thing is still fragile, because of the weak growth in Europe”.
“This will not make Mario Draghi deviate from his expansionary stance in the foreseeable future.”
 
In the last month of 2016, the bank loan rates to the companies within euro-zone went up by “2.3 percent”, following a “revised 2.1 percent” increment in the previous month, whereby marking the “fastest pace” of growth since the mid-year of 2009, as demonstrated by ECB data on Friday. On the front of household lending the rates “accelerated to 2.0 percent” in last December from its “1.9 percent” rates of November 2016, which turned out to be fastest since the mid-year of 2011. Greg Fuzesi, an economist at JPMorgan, stated:
“This is clearly not that strong in absolute terms, but it continues to be a big improvement on the last couple of years. Lending trends are also positive in most countries.”
 
According to Reuters:
“The annual growth rate of the M3 measure of money circulating in the euro zone, which has in the past often predicted economic activity, rose to 5.0 percent last month from 4.8 percent in November, slightly beating forecasts of 4.9 percent”.
 
 
 
 
References:
http://www.reuters.com/







Science & Technology

Financial giants and US government turn to quantum computers

Long Way To Go For Coronavirus Vaccine, Say Drgumakers

Google's subsidiary launches recognition service for photoshopped images

Unapproved Drug For Coronavirus Treatment And Testing Given By Gilead Sciences

Live Facial Recognition Cameras Will Be Used By London Police

Driverless Vehicle For Its Ride-Sharing Service Unveiled By GM’s Cruise

Amazon will allow customers to pay with palms instead of cards

Complete Computer System For Self Driving Cars Launched By Qualcomm

In A Lifetime We Could Accumulate 20Kg Micro-Plastic In Our Body

Creator Of The First 'Gene-Edited' Babies Of The World Gets 3 Year Jail Term In China

World Politics

World & Politics

Ex-head of Mexican Pemex will be transferred to Madrid prison

China Releases First Detailed Study Of Coronaviurs Attack, Finds Elderly At Most Risk

EBA Finds Alarming Compliance Results For Gender Diversity Among Banks

Record high temperature observed in Antarctica

Venezuela to initiate international litigation against USA because of sanctions

Coronavirus Death Toll 204 In China, US Asks Americans Not To Go China

Hong Kong protesters block railway to mainland

Heavy rain kills 47 people in southeast Brazil