“The first two decisions by the ECB to cut interest rates have given businesses a little more courage. This is confirmed by the latest ECB statistics – in the euro zone, in the third quarter of this year, business interest in loans was the highest in the last two years. According to the Bank of Lithuania, the volume of business loans grew gradually in Lithuania during the summer. Greater interest in loans is observed in the construction, transport and trade sectors,” states European Merchant Bank | Aurelijus Šveikauskas, EMBank board member.
The portfolio of business loans is growing
According to the data of the Bank of Lithuania, the annual growth rate of the business loan portfolio reaches 3.4%, and the monthly volume of business lending reaches about 190 million. Eur. At the same time, general trends in Europe also show an increase in demand for loans, especially in countries such as Spain and Italy.
Company photo/Aurelijs Šveikauskas
According to A. Šveikauskas, the latest ECB reports indicate that certain sectors, such as energy and manufacturing, began to borrow more actively, seeing more favorable trends in lending conditions and investing in development and innovation. October 17 After lowering the interest rate once again, ECB representatives emphasized that the disinflation process has properly accelerated. This is also confirmed by the fact that in September the overall price growth in the euro zone decreased and for the first time in three years was below the 2% inflation target set by the ECB.
It can be seen that the reduction of the interest rate has somewhat freed the expectations and possibilities of consumers. As shown by the data of the Bank of Lithuania, after the decrease in the interest rate on loans, Lithuanians began to borrow a little more actively.
And these are just a few examples of how the ECB’s decisions have begun to change consumer behavior. With a decrease in the financial costs of loan servicing, people can more easily meet other needs – purchase additional services, food and other goods.
Wait or invest?
“Although interest rate cuts signal a reduction in inflation, caution is still felt. Undoubtedly, the most important factor for success is the business ability to adapt to the changing macroeconomic environment and the ability to make investment decisions at the right time. However, every positive change, such as decreasing financial costs, signals the potential for economic growth in the near future, and encourages businesses to think about new ideas and solutions in order to keep up in the competitive environment,” EMBank’s representative asserts.
A year of economic stabilization
According to forecasts of Morningstar, the US financial services giant, inflation in the Eurozone in 2024 should not reach 2% at the end of the year, which would provide more room for the ECB to further reduce interest rates or at least keep them stable for a while.
At least one more rate cut by the ECB is expected this year. This could mean even more relief for businesses, as a fall in Euribor will also lower financing costs.
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