March 27, 2014 / 9:07 AM / in 3 years

Euro zone private sector loans contract further in Feb -ECB

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FRANKFURT, March 27 (Reuters) - Lending to households and firms in the euro zone shrank further in February and money supply growth remained subdued, adding to the European Central Bank's list of concerns ahead of its policy meeting next week.

The ECB has cut interest rates close to zero, pumped extra liquidity into the banking system and announced a fresh government bond purchase programme, but the measures have so far not managed to unclog lending to the real economy.

Euro zone inflation is also running far below the ECB's target of just under 2 percent, hitting 0.7 percent in February.

Loans to the private sector fell by 2.2 percent in February from the same month a year earlier, ECB data released on Thursday showed. That compared to a contraction of 2.3 percent in January.

Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 1.3 percent, picking up slightly from 1.2 percent in January.

The ECB holds its next policy meeting on April 3.

Reporting by Eva Taylor and Jonathan Gould

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