Credit lending survey sugar-coats ECB ahead of policy meeting
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The ECB’s credit lending survey for January is a sweet tone for the ECB policymakers as they are heading for the Governing Council meeting this Thursday.
The credit markets are functioning well, with the growth rate of loans continuously supported by increasing demand across all loan categories, the survey says. Credit standards remained broadly unchanged for enterprises and consumer credit, while they continued to ease for housing loans. In terms of loans for enterprises, the credit conditions actually eased further, especially for loans to enterprises and housing loans.
The credit lending survey also notes that banks in the Eurozone continued to strengthen their capital positions in response to regulatory and supervisory actions.
That is a good news for ECB President Mario Draghi as the credit lending survey is a confirmation of the right path of the ECB policies, leaving Draghi concentrating on other policy issues to reflect during the press conference following the Government Council meeting this Thursday afternoon.
In terms of the economic growth, the goods news flow one after the other even with the forecast provided by the International Monetary Fund expecting the GDP growth rate at 2.1% for 2018 and 2.0% in 2019 increasing it by 0.3% for both years compared to last October’s version.
The inflation though is still below the ECB’s 2% target and with the current strength of EUR, the comments on the detrimental effect of currency appreciation on import prices and the ECB’s inflation target are set to take the center stage at the presser in Frankfurt this Thursday. Some Governing Council members have already commented on recent foreign exchange market development indicating that steep currency appreciation is unwanted phenomena and more is to come from ECB President Draghi.
Talking the Euro down is the costless and straightforward communication strategy that always at disposal for the ECB President to use. The only problem with such approach is that it might be found only short-lived effect on the FX market. For details of what to expect of the ECB read my Preview here.
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