2023-05-08 19:23:14
A US Federal Reserve survey released Monday showed that US banks tightened credit standards during the first months of the year and witnessed weak demand for loans from businesses and consumers, in the latest sign that the US central bank’s interest rate hike is beginning to affect the financing sector.
The Fed’s quarterly survey of senior loan officials, the first since a series of recent bank failures, showed that 46 percent of banks have tightened credit conditions for a key category of medium and large corporate loans, compared with 44.8 percent in the previous survey. in january.
For smaller companies, the conditions are somewhat more stringent. And 46.7 percent of banks said credit conditions are now tighter, compared with 43.8 percent in the last survey.
Banks reported that firms of all sizes were less in demand for credit than they were three months ago.
As for consumers, banks said weak demand for credit cards, auto loans and other forms of household loans has returned, although not to the degree seen at the end of last year. Banks have shown less willingness to provide loans to consumers that can be repaid in instalments.
Economists, who study the reaction to the survey, say that the rise in stocks of banks that are tightening credit standards gradually leads to a slowdown in economic activity and may be a precursor to a downturn.
Last week, regulators seized the troubled First Republic Bank, before agreeing with giant JP Morgan Chase & Co to buy most of its assets, in the biggest collapse of an American bank since the 2008 financial crisis.
Last March, America witnessed the collapse of Silicon Valley and Signature banks, which caused a strong shock in the US stock markets as well as in Europe and Asia, and raised widespread fears of the spread of banking crises to other regions in the world.
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