Eurozone banks see some tightening of their credit standards in the third quarter of 2021. against the background of expected growth in demand for corporate loans.
This is shown by the results of the last quarterly survey of the European Central Bank on the standards for granting bank loans in the region of the single currency.
At the same time krevision standards remained stable in the second quarter after a significant tightening last year, the ECB said in its latest survey of the bloc’s largest creditors. In terms of demand, data show that companies are now more willing to invest.
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“For the first time since the third quarter of 2019, the financial needs of companies for long-term investments have contributed positively to the demand for bank loans, which suggests that companies may become a little more willing to invest,” said the ECB.
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Research on bank lending is usually essential in the ECB’s policy decisions, but the forthcoming regular meeting on Thursday (July 22nd) is likely to focus on better adaptation of the stimulating banking policy to its new strategy.
Earlier this month, the ECB revealed a change in its current inflation target and said long periods of low inflation, as seen in recent years, may require stronger or more sustained stimulus measures.
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While the ECB is unlikely to introduce new stimulus measures to align policy with the new strategy, it is likely to signal an even longer stimulus period, hoping to raise inflation expectations and eventually return real price growth to its target level of just under 2 percent, which has not been achieved for almost a decade.
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According to the latest ECB study, banks expect mortgage lending standards to remain broadly stable. At the same time, banks expect a further net increase in demand for loans from both companies and households.
Banks in the euro area recorded an increase in demand for loans or credit lines for most economic sectors, concluded the ECB.
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