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Lagarde Notes the Sharp Rise in Longer-Term Rates

ECB
  • Longer term interest rates have risen markedly since the last meeting reflecting strong increases in other major economies. Our monetary policy continues to transmit strongly to broader financial conditions. Funding has become more expensive for banks.
  • Higher borrowing rates coupled with cuts in investment plans and house purchases led to a sharp drop in credit demand as reported in the latest BLS. Credit standards also tightened further. Banks are becoming more concerned by risks facing their customers.
  • Against this background credit dynamics have weakened further. Loans to households remain subdued with the growth rate slowing.
We note that the addition on banks being less willing to take on risks is new to the statement. Q&A begins.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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