Activity indices are holding up, but household confidence is eroding
Business sentiment indicators did not falter in March, and prospects of price rises are confined to a few sectors (oil and chemicals). The downturn is, at this stage, less pronounced in services and construction. Household confidence is deteriorating more noticeably against a backdrop of significantly rising inflation expectations and gloomier prospects for economic activity and unemployment.
Interest rates also remain stable, but lending is moderating
Interest rates on new loans to households and businesses remained stable in February. This stability came alongside a continued year-on-year slowdown in new loans to households for house purchase. New consumer loans continue to grow at a slower pace than its long-term average. On a year-to-date basis, the weaker momentum in net bank lending to businesses is being partially offset by the increase in net debt-security issues.
