Fed's Survey shows no evidence of loan rebound

The Fed's latest survey of Senior Loan Officers reveals a disturbing drop off in the demand for new loans and the renewed tightening of credit conditions for residential mortgages and other consumer loans. On this evidence, claims that quantitative easing will lead to a new boom in bank lending look well wide of the mark. The even greater excess reserves that banks will accumulate gives them the potential to expand their lending quite dramatically. In practice, however, lenders remain reluctant to lend and borrowers remain reluctant to borrow, supporting our view that US economic growth will continue to stumble along at around 2% per annum for some time yet.