The advantage of using interest rates is that it affects all parts of the financial sector, although this could be a disadvantage at the same time, as interest rates are seen to be a ‘blunt tool’, impacting on the cost of credit in areas where this is not desired. Using the interest rate tool could also result in higher inflation variability.
The annual growth rate of loans to households (adjusted for loan sales and securitisation) stood at 0.2% in January 2014, broadly unchanged since the beginning of 2013. Since the summer of 2012 substantial progress has been made in improving the funding situation of banks.