Aug 3 - The Federal Reserve's latest quarterly Senior Loan Officer Survey, released for July, indicates that lending standards for commercial and industrial (C&I) loans were reported as "basically unchanged" during roughly the second quarter. The report also highlighted a shift in demand patterns, with large and middle market firms accounting for stronger borrowing interest in C&I credit.
Banks responding to the survey described mixed developments on the household side. For loans to households, respondents reported varied changes in lending standards and noted weaker demand for residential real estate. Credit card lending standards were reported to have tightened while demand for such cards remained stable. By contrast, standards for auto loans and other consumer lending types were largely unchanged even though demand for car loans eased.
The Fed's update said that demand for credit at smaller firms during roughly the second quarter was "about the same" across all banks that took part in the survey. The report placed current lending standards within the historical ranges the Fed tracks since 2005, noting that "on balance" standards are "at the tighter end of the range for all loan categories except C&I loans, for which standards are generally easier than their midpoints" of those ranges.
This lending assessment comes as businesses and lenders operate in an environment the Fed described as one of persistently strong inflation, while economic growth remains solid and the job market is stable. Those conditions are part of the backdrop as the central bank weighs whether to raise interest rates further to return inflation toward its 2% target.
Last week the Fed left its target range for the federal funds rate unchanged at between 3.5% and 3.75%, and the central bank's chair declined to provide guidance on future moves.