According to the July euro area bank lending survey (BLS), euro area banks reported that credit standards for loans or credit lines to euro area firms remained broadly unchanged in the second quarter of 2025 (net percentage of banks of -1%). The net percentage follows a small net tightening in credit standards for loans to firms in the first quarter of 2025 (3%) and was smaller than banks had expected in the previous survey round (net tightening of 5%).
The results reported in the July survey relate to changes observed during the second quarter of 2025 and expectations for the third quarter of 2025. The survey was conducted between 13 June and 1 July 2025. A total of 155 banks were surveyed in this round, with a response rate of 100%.
The ECB said that euro area banks mostly reported no specific additional tightening impact on their credit standards from geopolitical uncertainty and trade tensions, although they intensified their monitoring of the most exposed sectors and firms. Among the four largest euro area countries, banks in Germany reported a net tightening of credit standards for firms, banks in Italy reported a net easing and banks in Spain and France reported unchanged credit standards. The net percentage of credit standards for firms was lower than banks had expected in the previous survey (net tightening of 5%) and follows a small net tightening in credit standards in the first quarter (3%). For the third quarter of 2025, banks expect unchanged credit standards for firms (0%).
Economists expect that at its July meeting, the ECB will keep the deposit rate at 2.00% amid the uncertainty of the global situation. Inflation data for June showed overall inflation at 2.0% year-on-year, while core inflation remained at 2.3%. However, service price inflation rose slightly to 3.3%. Despite the pause, experts believe that the ECB has not yet completed monetary policy easing. Policymakers have stressed the importance of a data-driven approach, and economists still expect a final 25 basis point rate cut by September, bringing the deposit rate to 1.75%. President Trump recently threatened to impose 30% duties on EU goods from August 1, but given the ongoing negotiations and the practice of canceling or delaying the imposition of duties, there are still expectations that the final rate of duties may be reduced. In this regard, the ECB does not have a special need for an urgent rate cut at the July meeting.