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Lagarde: Monpol tightening continues to be transmitted

ECB

Monetary policy tightening continues to be transmitted to broad financial conditions. Funding has become more expensive for banks, in part owing to the phasing out of TLTROs. The large TLTRO repayment in June went smoothly. Average lending rates for business loans and mortgages rose again in May. Higher borrowing rates and cuts in spending plans, led to a sharp drop in credit demand in Q2 as reported in the BLS. Credit standards to firms and households tightened further as banks become concerned by risks facing their customers. Tighter financing conditions are making housing less affordable. Demand for mortgages has dropped for the 5th quarter in a row.

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