The Eurozone Credit Crunch

The reason why credit is not growing that fast anymore is very simple. It's really expensive to borrow. In Europe, junk corporates and Rias were basically spoiled. They could borrow at 3% only in interest rates for five, seven years. If they go out in the market today to borrow, that interest rate is 6%, 7,. 8%. mortgage rates moved from 1 to 4 in Europe. The demand for credit is not there at these levels. And banks on the other end are also taking a step back, right? Acting more conservative. But then before you see the negative effect of credit contraction on growth and on inflation, it generally takes a few quarters. So the credit deterioration

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