ECB bank lending survey shows no immediate lending pickup

ING Global Economics Team ING Economic and Financial Analysis

The bank lending survey for the eurozone shows continued muddling through, with credit standards easing slowly but demand for loans remaining slow. This means that investment is set to remain subdued in the months ahead and shows that tight monetary policy is still having a restrictive effect.

The April bank lending survey shows that bank lending is set to continue to flatline in the current weak economy with high rates. Last quarter’s survey showed a marked improvement in expectations of loan demand, which did not really materialize. The first quarter outcomes show that net loan demand remained negative, with low demand for fixed investment and high-interest rates as the main drivers. The expectations for the second quarter have also moderated a bit, indicating that the bank lending environment is set to remain very subdued in the months ahead.

Credit standards continue to ease slowly, with large differences visible between the main countries. In Germany, standards have eased only slightly in recent quarters, while in France and Italy, the moves have been more notable.

Recently, it has become clear that the impact of the recent record rate hikes from the European Central Bank has already faded when looking at the bank lending channel. The small declines in lending that were seen mid-2023 have been followed by a cautious recovery for both households and non-financial corporates. This indicates that the biggest impact of rate hikes on lending are behind us. Today’s bank lending survey shows that there is no quick recovery in the making either, though. For the ECB, this means that easing rates will be relevant for an investment recovery in the second half of the year.

Read the original analysis: ECB bank lending survey shows no immediate lending pickup

Author

ING Global Economics Team

ING Economic and Financial Analysis

From Trump to trade, FX to Brexit, ING’s global economists have it covered. Go to ING.com/THINK to stay a step ahead.

EUR/USD off highs, back to 1.1850

EUR/USD loses some upside momentum, returning to the 1.1850 region amid humble losses. The pair’s slight decline comes against the backdrop of a marginal advance in the US Dollar as investors continue to assess the latest US CPI readings.

GBP/USD advances to daily tops around 1.3650

GBP/USD now manages to pick up extra pace, clinching daily highs around 1.3650 and leaving behind three consecutive daily pullbacks on Friday. Cable’s improved sentiment comes on the back of the inconclusive price action of the Greenback, while recent hawkish comments from the BoE’s Pill also collaborates with the uptick.

Gold surpasses $5,000/oz, daily highs

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The yellow metal’s upside is also propped up by the lack of clear direction around the US Dollar post-US CPI release.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.