In the last quarter of 2024, the Bank ECB loan survey reported that promising investment growth signs, with credit standards remain stable after the prolonged tightening period. Loan demand has also increased slightly for the first time since Q3 2022. This quarter, the ECB reported that regarding risks in the global economy had increased between banks, which produced credit standards for businesses that were tightened again. The bank does see the continuing increase in increased loan demand from business in accordance with the survey.
For mortgage, credit standards remain unchanged but demand continues to increase strongly. This means that the housing market, which has shown signs of fast recovery, is expected to recover further even though long-term results have increased since November.
For ECB, it must be frustrated that new cuts have not yet produced meaningful monetary easing through loan channels. At the same time, the current interest rate is widely considered to still limit and ECB wants to move to neutral relatively fast. With more coasts to come, the ECB will expect further improvement in the loan channel.
So far, a small increase in loan demand will not be translated into far stronger investment growth. The movement is too small for that, and the current investment conditions are not very attractive. The level of low capacity utilization in manufacturing and economic uncertainty because it continues to burden the short -term investment potential in the Euro zone.
Source: Ing
