Eurozone bank lending survey shows that lending continues to support recovery - ING

Eurozone bank lending survey provides further argument for a "lower for longer" strategy as ECB is about to decide on tapering, according to Bert Colijn, Senior Economist at ING.

Key Quotes

“The arguments for the timing of the ECB's tapering announcement seem pretty solid. The economy is performing well, the first signs of pipeline inflation pressures are showing and credit conditions are continuing to improve. That means the first few paragraphs of Draghi’s speech on Thursday should not be too difficult to write.”

“One very supportive argument for the ECB’s anticipated tapering plans is that the survey indicates that QE has helped to ease credit conditions and that negative rates have had a positive impact on the volumes of lending in the Eurozone. This provides supporting arguments for the ECB to continue QE for a longer period of time and to keep the current sequencing message in: the fact that rates will remain at present levels beyond the end of the QE horizon.”

“Credit standards for enterprises tightened marginally, which was mainly due to Spain and Italy while they eased in Germany. While conditions may have been broadly unchanged for the Eurozone as a whole, the actual loan contracts showed that banks eased conditions to enterprises in the third quarter. Demand for loans to enterprises increased in the third quarter, mainly because of low interest rates and the demand for fixed investments. With credit conditions and demand for households also improving, this bodes well for GDP growth in the quarters ahead and adds to the picture of healthy Eurozone growth for the end of 2017.”