Sustained Loan Growth In The Eurozone

By Peter Vanden Houte of ING Think

Economic and Financial Analysis • Sep 26, 2026 at 7:00 AM EDT • Updated Sep 26, 2026 at 7:00 AM EDT

Eurozone money supply growth edged higher in August, supported by resilient private-sector lending.

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Steady as she goes

Eurozone broad money supply (M3) grew by 3.5% year-on-year in August, up from 3.4% in July 2026. Even so, growth remains below the 5.2% historical average recorded since the monetary union began in 1999. The ongoing reduction in the Eurosystem’s balance sheet is, of course, continuing to weigh on M3 growth.

Turning to the drivers of money growth, claims on the private sector rose by 3.6% year-on-year, compared with 3.4% in July. The annual growth rate of loans to households stood at 3.1% in August, unchanged from July. In the latest European Central Bank Consumer Expectations Survey, it appears that the net percentage of consumers who found that credit access had become harder slightly decreased in July, which seems to signal that credit growth to households is likely to be sustained in the coming months. Loans to non-financial corporations grew 4.2% year-on-year in August, a slight deceleration from 4.4% in July, but still above June’s 4%. The continuing global uncertainty is probably weighing on investments, although this impact still seems to be rather modest.

The third pillar

As Christine Lagarde has repeatedly stressed, the ECB’s reaction function rests on three pillars: the inflation outlook, underlying inflation and the transmission of monetary policy. These figures provide some information on the third pillar. So far, demand for loans from households and businesses has been only marginally affected by somewhat tighter financing conditions. Admittedly, by August the ECB had raised interest rates only once. Moreover, monetary policy operates with considerable lags and, even after the September rate increase, the current interest rate level is still regarded as broadly neutral. Overall, the data does not suggest that the expansion is about to slow sharply. With inflation risks still tilted to the upside, the figures continue to point towards another rate hike in December.

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