ECB releases report for the Eurozone!

The European Central Bank (ECB) has published its Bank Lending Survey report, prepared with the participation of 157 banks in the Eurozone. According to the report, loan demand decreased in the last quarter of 2023, while a slight increase is projected for the first quarter of this year.

The report noted that loan demand from companies in the Eurozone also declined in the last quarter of last year, with a slight increase in demand anticipated for the first quarter of this year.

DECLINE IN MORTGAGE AND CONSUMER LOANS

It was stated that household demand for mortgage and consumer loans also declined during the same period.

In the ECB's report, it was assessed that, "The general level of interest rates was a decisive factor in the decline in demand across loan categories. Furthermore, while the decrease in fixed investments reduced firms' demand for credit, the weakening in consumer confidence and expectations regarding the housing market lowered household demand for credit."

It was stated that for the first quarter of this year, for the first time since the beginning of 2022, a slight increase is expected in corporate loan demand and household mortgage demand from financial institutions, while a further decline is projected for consumer loan demand due to high interest rates and uncertainty.

The ECB, in its report announced in October 2023 regarding the third quarter of the year, had also reported that net loan demand from households and companies in the Eurozone had decreased due to high borrowing costs and concerns regarding the economic outlook.

INTEREST RATES RAISED TO COMBAT INFLATION

The ECB increased its refinancing rate, which was 2.50 percent at the end of 2022, by 50 basis points at its first meeting in 2023, raising it to 3 percent.

Continuing interest rate hikes throughout the year, the ECB raised the refinancing rate to 4.50 percent at its September 2023 meeting, and did not make any changes in its October and December meetings.

The annual inflation rate in the Eurozone, which was 8.6 percent in January 2023, fell to 2.9 percent in December 2023.

TARGET IS 2 PERCENT

The ECB aims for inflation to be 2 percent across the entire Eurozone for a healthy economy.

The ECB's next meeting will be held on Thursday, January 25. Analysts predict that the Bank will not make any changes to its key interest rates, just as it did in October and December.

News Source: 12punto