Economic Buzz: Loan demand from firms and households is expected to decrease, says ECB survey

Eurozone banks tightened credit standards in the second quarter amid higher funding costs, the Bank Lending Survey results from the European Central Bank showed Tuesday. Banks reported a net tightening of credit standards for loans to firms and households, driven by perceived risks and lower risk tolerance. Banks expect to tighten credit standards across all loan categories also in the second quarter, further reflecting geopolitical tensions, energy developments and higher funding costs. Loan demand from firms and households is expected to decrease as a result of reduced financing for fixed investments, lower consumer confidence and less spending on durables. Banks? access to funding deteriorated for debt securities, money markets and securitisations, with a deterioration across all funding sources expected in the next quarter.

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