POWER: France, Morocco Eye Power Interconnector

Eurozone lending to households and firms accelerated in December, in a sign that ECB policy rate cuts are slowly being fed through to the real economy. More data will be required for the ECB to judge its policy settings as neutral (rather than restrictive) though, particularly after the Q4 Bank Lending Survey signalled a tightening in firm lending standards and soft firm loan demand expectations for the next 3 months.

• Adjusted for sales and securitisations, lending to firms grew 1.5% Y/Y (vs 1.0% prior), the strongest annual rate since July 2023. Accelerations were seen in Germany, France and Italy, but fell slightly in Spain.
• Household lending ticked up to 1.1% Y/Y (vs 0.9% prior), with all four major Eurozone countries contributing. A pickup in household consumption is a key tenet of the ECB’s projection for economic growth to recover in 2025.
• As a percentage of GDP, the Eurozone credit impulse continues to recover. Looking at the slow moving 12m/12m measure, new lending provided a 0.7% GDP boost in December (vs 0.5% in November). The impulse on a shorter term  3m/3m year ago measure was larger at 1.4% GDP (vs 0.8% prior).
• 3m/3m year ago credit impulse accelerations were seen in Germany, France and Italy.
• Overall M3 money growth was a little softer than expected at 3.5% Y/Y (vs 3.9% cons, 3.8% prior).
• Focus will be on President Lagarde’s commentary around this data and the Q4 BLS at tomorrow’s press conference.

No reaction in core global FI as crude oil benchmarks fall by ~$1 over a 30-minute window.

• Our commodities team doesn’t see any driver for the move in crude, with an uptick in the broader USD much more measured over the same timeframe, so that lacks explanatory power.
• Brent through yesterday’s low but within the multi-session range. Yesterday’s low in WTI holds. 

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