27 January 2025

• Firms reported declining bank interest rates on loans, although indicating a slight further tightening of other lending conditions.
• There was a slight increase in the bank financing gap compared with the previous quarter as firms reported a small reduction in bank loan availability and no change in the need for bank loans.
• Firms’ inflation expectations increased slightly, with their median expectations for annual inflation in one, three and five years all standing at 3.0%, 0.1 percentage points higher across all three horizons.
• Nearly half of the firms surveyed see the ECB’s inflation target at 2% and these firms have lower inflation expectations than those believing the target to be significantly higher.

In the most recent round of the Survey on the Access to Finance of Enterprises (SAFE), euro area firms reported a decrease in interest rates on bank loans (a net -4%, compared with a net 4% reporting an increase in the previous quarter), although a net 22% (30%…