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Editorial, Informative

Fed Says Banks Forecast Improved Lending Outlook for 2013

U.S. banks expect credit quality to rise in 2013 after they eased standards on loans for autos and businesses of all sizes, according to a Federal Reserve survey.

“Banks expect improvements in credit quality in most major loan categories” in 2013, the central bank said today in its quarterly survey of senior loan officers released in Washington. The number of banks with such an expectation was described as “moderate to large.”

Business lending standards were “eased somewhat for all firm sizes” and banks “again eased standards on auto loans,” the Fed said in its report. Standards for mortgages and credit card loans were little changed, the survey said.

The report bolsters the Fed’s view that a slump in economic growth during the fourth quarter was temporary, and that record- low interest rates will help fuel the recovery as credit thaws. The Fed said last week growth “paused,” following a report that the economy shrank at an annual rate of 0.1 percent in the fourth quarter.

“Credit conditions are still tight but they’re certainly much easier than they were just a couple years ago,” said Dana Saporta, a U.S. economist at Credit Suisse Group AG in New York. “It’s not as much of a drag as it was.”

The Federal Open Market Committee said in a Jan. 30 statement that growth will “proceed at a moderate pace and the unemployment rate will gradually decline.”

Read the full article at: Bloomberg.

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