FRANKFURT: The volume of loans to the private sector in the euro area expanded in October, with a bigger bounce recorded than the previous month, ECB data showed on Thurs­day, suggesting a massive stimulus programme may be working.

The data are for the European Central Bank (ECB) a key indicator of economic health, as borrowing is a main source for corporate investment which in turn should boost the eurozone’s currently weak economy.

During October, loans accorded rose 1 per cent from a year ago, compared with a growth of 0.6pc recorded in September, an ECB spokesman said.

When certain strictly financial transactions are stripped out from the loans data, the trend remains the same — with credit accor­ded to households and companies rising 0.8pc in October, up from 0.4pc in September and 0.7pc in August.

Growth in overall money supply, known as M3, also accelerated 5.3pc in October from 4.9pc in September.

The ECB regards M3 money supply as a barometer for future inflation.

The bank has launched a raft of policy measures to get credit flowing and to boost inflation, most significantly a massive programme to buy more than one trillion euros ($1.1tr) worth of public sector bonds to pump liquidity into the system.

It has also pledged to examine if it needs to boost the so-called quantitative easing programme when the ECB board meets next week.

But Thursday’s data “suggest that the monetary stimulus which the ECB has already delivered is work­ing,” said Holger Schmieding from Berenberg Bank.

“The case for a stronger stimulus is thus not clear-cut,” he said.

Capital Economics analyst Jack Allen said however that the pace of growth in private sector loans remains slow even if it is accelerating from a month ago.

Published in Dawn, November 27th, 2015