Borrowing among eurozone firms and households grew by three percent year-on-year in January, according to European Central Bank data (DANIEL ROLAND)

Frankfurt am Main (AFP) – Lending to the private sector in the eurozone decelerated in January, ECB data showed Wednesday, as the withdrawal of a central bank stimulus last year begins to show its impact.

Borrowing among eurozone firms and households grew by three percent year-on-year in January, according to European Central Bank data after adjusting for some financial transactions.

In December, the growth was at 3.4 percent.

Growth in loans to households held at 3.2 percent in January, unchanged from the previous month.

But that of adjusted loans to non-financial companies declined to 3.3 percent in January from 3.9 percent in December.

The data showing less lending flowing to non-financial companies came after the ECB wound down mass purchases of government and corporate bonds, known as “quantitative easing”.

Over more than three years the Frankfurt institution bought more than 2.6 trillion euros ($3 trillion) of government and corporate bonds, aiming to pump cash through the financial system to stoke growth and inflation.

But while the scheme has succeeded in warding off deflation — a harmful spiral of falling prices and activity — price growth has fallen back from the ECB’s target of just below 2.0 percent.

Market observers are looking to the ECB to discuss deploying a new campaign of massive loans to banks at its next monetary policy setting meeting in March.

Expected to be launched mid-year, the operation would be a new means of propping up loans and the economy.

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