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Notably Milder Tightening In Business Lending Conditions Than The US

CANADA
  • Business lending conditions tightened further in Q2 but by less than was the case in Q1, with 7.6% vs 11.3% in Q1.
  • The softer tightening was driven by non-price conditions whilst price conditions continued to tighten at a similar pace to the prior quarter.
  • However, in doing so it continues to see a substantially more lenient response from Canadian lenders than those in the US, both since the regional banking fallout from March onwards but also beforehand in 2H22 as rates increased aggressively.
  • The divergence, at least compared with commercial and industrial loans, stands out with prior cycles when the two moved more closely in lockstep.

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