By Balazs Koranyi
FRANKFURT, (Reuters) - Euro zone banks eased their credit standards in the third quarter and expect to keep them unchanged in the last three months of the year, an ECB survey showed on Tuesday, relief for policymakers who fear a drop in lending amid a slowdown.
With economic growth slowing and recession fears rising, the ECB has already approved extensive stimulus measures, hoping that making credit even cheaper will keep banks lending to the real economy even during a period of anemic growth.
Credit standards or banks' internal loan approval criteria eased for business loans and mortgages in the third quarter, beating expectations for no change, the ECB said in a survey that form a key input in its policy deliberations.
"For the fourth quarter of 2019, banks expect credit standards to remain broadly unchanged for all loan categories," the ECB added.
While bank executives often complain about the ECB's negative rates as an impediment to lending growth, the survey of 144 lenders indicated a negative deposit facility rate continued to contribute to an increase in lending volumes and a decrease in lending rates across all loan categories.
In the fourth quarter, banks expect credit standards to remain broadly unchanged for all loan categories.
In terms of demand, banks see an increase in net demand for housing loans and for consumer credit while they expect demand for business loans to remain broadly unchanged.
The ECB next meets on Thursday in Mario Draghi's last meeting at the bank's president and markets expect no change in policy, even if they expect a dovish undertone.