The European Central Bank’s latest quarterly bank lending survey shows that lending standards are getting looser and that demand for credit is rising. Lorcan Roche Kelly of Agenda Research summarised the main findings with this handy chart:
Negative numbers for the orange-ish lines mean that lending standards have loosened (slightly), meaning credit is easier to get. Positive numbers for the green and blue lines mean that demand for loans is increasing. Overall the supply of loans is still shrinking, but not as fast as it was in recent years and loan growth could even return by the end of 2015 if current trends hold up. That said, we can’t help but note the large difference visible in the chart between loans to households (orange and beige) and loans to businesses (red). Read more
Interest rates are very likely to remain unchanged at record lows and little is expected on the central bank’s plans to buy asset-backed securities or embark on full-scale quantitative easing.
The decision is out at 12.45pm UK time. Read more
A hopeful outlook on the European economy has apparently become a non-contrarian view. This was bound to feel strange and does, but last week we highlighted the proliferating number of research notes citing reasons for relative optimism.
Matt King of Citigroup also spots these trends, but he tacks on a useful discussion of the potential (foreseeable) obstacles: Read more
An early trickle of cautiously hopeful research notes about Europe’s economic situation has become a monsoon in the past week.
It follows the not-atrocious PMI and bank lending surveys, the ECB collateral rule changes meant to shift more credit towards the SMEs, the expectations-beating Spanish unemployment numbers, and a few other data points. Read more
The ECB, BOE and Fed all meet this week, though expectations vary about what will emerge from each:
— The Fed: The FOMC seems unlikely to announce anything major regarding its possible tapering strategy until September, though as always its post-meeting statement will be scrutinised for changes regarding the committee’s outlook for the economy. Some private sector strategists think the Fed could introduce a tapering schedule as soon as this week’s meeting without actually beginning to taper. But given the obviously unanticipated and unwelcome market reaction to Bernanke’s comments about tapering in the latest meeting, we doubt it. If anything, the minutes to this meeting will probably be more interesting than the statement itself. Then again, the FOMC has surprised us before, so we could turn out to be wrong. Read more