Eurozone banks see slight tightening in credit standards in Q3

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The logo of the European Central Bank (ECB) is pictured in front of its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS / Kai Pfaffenbach / File Photo

FRANKFURT, July 20 (Reuters) – Eurozone banks expect demand for business loans to rise sharply in the third quarter and will see only a moderate tightening in credit criteria or criteria for approving loans. loans, the European Central Bank announced on Tuesday.

Credit standards remained stable in the second quarter after a significant tightening last year, the ECB said based on a survey of the bloc’s largest lenders. On the demand side, the numbers suggest that companies are now more willing to invest.

“For the first time since the third quarter of 2019, corporate financing needs for fixed investments have positively contributed to loan demand, suggesting that companies may become less reluctant to invest,” the ECB said.

Loan investigations are normally a key consideration in ECB policy decisions, but Thursday’s meeting is likely to focus on tailoring the bank’s stimulus efforts to better fit its new strategy, which is likely. to trump all data in real time.

The ECB earlier this month unveiled a modified inflation target and said that long periods of low inflation, like those seen in recent years, may require stronger or more persistent stimulus efforts.

While the ECB is unlikely to unveil further stimulus to align policy with strategy, it is likely to signal an even longer period of stimulus, in the hope of raising inflation expectations and possibly to bring real price growth back to its 2% target, one brand has missed for nearly a decade.

For mortgages, credit standards are expected to remain broadly stable, the ECB added.

In terms of demand, banks expect a further net increase in demand for loans from both businesses and households, according to the survey.

Report by Balazs Koranyi Editing by Francesco Canepa

Our Standards: Thomson Reuters Trust Principles.


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