ECB’s lending survey adds to growth concerns
ECB’s bank lending survey shows that the risk of a credit crunch has diminished after the LTRO’s, as expected. However, it also added to the concerns about the underlying growth momentum in the euro-area economy, as the demand for loans fell sharply. That, together with the sharp drop in the PMI index for April released Monday, suggests that the downside risk to growth in the Euro area have increased.
The need for additional crisis measures from the ECB has diminished, but interest rate cuts have become more likely!
A net 9% of banks said they have tightened credit standards to firms in Q1 down from 35% in Q4 last year, a net 2% of banks expect to tighten of credit standards to firms further in Q2 vs 25% in Q1, and a net 17% of banks said they have tightened credit standards to households for housing purchases in Q1 down from 29% in Q4 last year.