ECB Expects Further Tightening in Credit Standards

Mon, 21 Jan 2008

The European Central Bank (ECB) has said that it expects a tightening in credit standards following a fall in demand for loans . The U.S. subprime mortgage crisis has already seen credit standards tighten, though with the rates at which banks lend to each other remaining inflated, a further tightening is expected in the early parts of 2008 as euro zone banks look to minimise the impact of the economic slowdown.

Along with the increased lending rates, other factors which have contributed to a tightening of credit standards include the struggling housing market, a fall in consumer confidence, fewer mergers and a weaker outlook for economic growth. The tightening in credit standards is expected to occur in all three areas – business loans, consumer loans and mortgages .
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