BERLIN, Aug 28 Reuters Growth in lending to euro zone companies slowed again in July, adding to already mounting evidence that sharply higher interest rates are putting a brake on credit creation and economic growth.

Lending to firms in the 20nation currency bloc expanded by 2.2 yearonyear after a 3.0 reading a month earlier, while household credit growth slowed to 1.3 from 1.7 in June, according to an ECB report.

The European Central Bank raised interest rates for the ninth time in a row in July, increasing the rate that the ECB pays on banks39; deposits from 3.50 to 3.75, its highest level since 2000, before euro banknotes and coins had been put into circulation.

At 5.3 in July, inflation remains far above the bank39;s target and could take until 2025 to fall back to the 2 target. Preliminary inflation data for August will be published on Thursday, with analysts polled by Reuters forecasting a decline in inflation to 5.1.

Economic data from PMI surveys in August showed the downturn in euro zone business activity deepened far more than thought this month in a broadbased fall across the region.

Economic growth indicators are now pointing to a contraction in the third quarter, despite what could be a recordbreaking tourism season. The weak data is intensifying debate over just how much more the ECB needs to do.

The M3 measure of money supply, seen in the past as a good indicator of future economic expansion, shrank 0.4 in July in a turnaround from growth of 0.6 in…