Nomura: Lending Improves Again But Remains Subdued

Nomura write “we saw an uptick in Eurozone lending data in November, the second consecutive month of improvement. However, lending remains subdued versus what was seen prior to the hiking cycle, and we don't expect to see a material near-term rebound in net lending.”

• “The ECB is focusing on the latter stages of the transmission mechanism, and the extent to which its monetary policy and the effects on the financial economy are spilling over to the labour market, activity and CPI.”
• “The question here is whether the weak lending data are sending a noisy signal; are the balance sheets of households and corporates sufficiently robust post-pandemic to allow them to reduce their demand for lending without necessarily weighing on activity, and thus underscoring the risks that the transmission mechanism is now longer than previously or potentially less potent than previously?”