FRANKFURT, March 28 Reuters Bank lending to euro zone companies and households continued to stagnate last month, with high interest rates likely to have discouraged borrowers as well as lenders, European Central Bank data showed on Thursday.

The ECB has jacked up borrowing costs to record highs to tame inflation but this has taken a heavy toll on the economy, which has been in the doldrums for a year.

Adjusted loans to households grew by only 0.3 in February, unchanged from the previous month. Growth in credit to companies accelerated slightly to 0.4 from 0.2 in January.

On the upside, the quantity of money circulating in the euro zone economy was no longer shrinking, instead growing at a still meagre 0.4 in February after a 0.1 increase in January.

With inflation now under control, the ECB is expected to start cutting interest rates in June.

Reporting by Francesco Canepa Editing by David Goodman and Mark Heinrich

Source Reuters