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Growth in lending to eurozone firms rebounds in July

[FRANKFURT AM MAIN] Growth in lending to companies in the eurozone rebounded in July following a slump in June, data from the European Central Bank showed Monday.

Loans to non-financial corporations grew 2.4 per cent last month, adjusting for some purely financial transactions, the ECB recorded in a monthly statement.

June had seen the pace of growth slump to 2.0 per cent from the 2.5 per cent achieved in May.

Meanwhile, expansion in lending to households maintained its 2.6-per cent rate in July, the same level as the previous two months.

Still in adjusted terms, overall growth in lending to the private sector picked up slightly, climbing from 2.5 per cent in June to 2.6 per cent in July.

Lending to households and non-financial firms is an important indicator of the effectiveness of the ECB's unconventional monetary policy - designed to boost growth and inflation with easy credit.

With cheap loans to banks, record low interest rates and monthly bond purchases of 60 billion euros (S$97.17 billion), policymakers have sought to pump cash through the financial system and into the real economy.

They hope that readier access to credit will prompt firms and households to spend, invest and hire, pushing up economic growth and helping inflation towards the ECB's target of just below 2.0 per cent.

But while growth in the 19-nation eurozone has picked up since the introduction of the policies, inflation remains stubbornly low, leaving policymakers debating over the right time to wind down their interventions.

ECB President Mario Draghi offered no hints about a possible end to bond-buying or low interest rates in a Friday speech at a central bankers' conference in Jackson Hole, Wyoming.