Loan demand from US mid- and large firms improves, Fed survey shows

Business loan demand from large and mid-sized US firms strengthened by the most in about three years in the third quarter while demand from small firms was essentially unchanged from the prior quarter, a Federal Reserve survey showed on Monday, reports Reuters.

But the survey also showed banks on balance continue to tighten terms of credit for firms of all sizes, albeit not by the margin seen earlier in the year, the Fed's quarterly Senior Loan Officer Opinion Survey showed. That dynamic may limit credit growth even as demand improves.

Nationwide Financial Market Economist Oren Klachkin said tightening lending standards in the face of rising loan demand "will blunt the boost to growth from the Fed's 50 basis points of easing in the last two months and make it harder for policymakers to support the job market."

The Fed last week cut interest rates by a quarter percentage point at a second straight policy meeting, but divided opinions among policymakers about whether inflation remains too steep or if the job market is weakening have blurred the outlook for another cut at its final meeting of the year in December.