The European Central Bank reported a sharp tightening of lending standards for businesses, due to the changing economic outlook, according to the Financial Times.
An ECB survey last week found the net percentage of banks reporting tighter credit conditions on loans to businesses rose to 41%, up from 31% in October.
Banks also reported tightening credit standards for people borrowing to buy houses and a drop in demand for those loans. Net demand was significantly negative, the ECB reported.
The ECB remains alarmed at the high inflation rates and has threatened to raise interest rates if excessive wages threaten price pressures. Despite the ECBs threats, financial markets are pricing in interest rates cuts later this year.