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ECB SAFE survey shows tighter euro-area loan pricing but stable demand

The ECB’s survey found inflation expectations stayed anchored around 3.0% over one and three years, even as net 42% of firms reported higher bank loan interest rates.

Reported · Written up by our desk · Central Banks

Euro area firms reported tighter borrowing conditions in the second quarter in the ECB’s Survey on the Access to Finance of Enterprises (SAFE), with pricing and lending terms becoming more restrictive even as financing demand stayed relatively contained, according to Action Forex.

A net 42% of firms said they faced higher bank loan interest rates, up from 26% in the previous quarter. Fees, commissions, and collateral requirements also increased, though non-interest financing costs and collateral demands moderated, the survey showed.

Overall, loan availability was broadly unchanged and firms reported only a modest rise in demand for bank loans. The survey also highlighted a split between large companies, which reported improved access to credit, and SMEs, which saw further deterioration.

In parallel, firms lowered their expectations for selling prices, non-labour input costs, and wage growth over the next 12 months. Inflation expectations remained well anchored at 3.0% over one and three years, while the five-year expectation edged slightly higher to 3.1%, reinforcing the ECB view that restrictive monetary policy is constraining financing without triggering a broad credit squeeze.

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