According to the “Bank Loan Survey” published by the European Central Bank (ECB), the loan demand of companies in the Euro Zone fell at a record level in the second quarter.
The loan demand of companies in the Euro Zone fell to a record level in the second quarter.
According to the ECB’s “Bank Credit Survey” released on Tuesday, this decline in loans exceeded expectations, largely due to the decline in mortgage and other consumer borrowing demand.
The survey, which was first conducted in 2003 and repeated quarterly, is known for presenting the current picture of how the policies implemented by the ECB in its fight against high inflation affect credits.
Banks also tightened their criteria for lending.
Alongside the softening in demand, banks in the eurozone have also tightened their criteria for lending to companies and households due to more costly financing and a weaker economy, the survey found.
ECB Chief Economist Philip Lane said on July 12 that it is “one of the ECB’s primary tasks” to assess how banks will respond to higher interest rates.
As the ECB prepares to raise the deposit rate by another 25 basis points to 3.75 percent at its meeting on Thursday, many investors are already pricing in another rate hike, which is expected to come with a very high probability by the end of the year.