(Reuters) -U.S. banks say demand for business loans strengthened in the fourth quarter, with the net share of banks reporting an increase turning positive for the first time in two years, a Federal Reserve survey on Monday showed.
The net share of banks reporting stronger demand for commercial and industrial loans from large and medium-sized businesses rose to 9.4% in the fourth quarter of 2024, and from small firms to 3.4%.
At the same time, banks also tightened standards for those types of loans, according to the Fed's quarterly Senior Loan Officer Opinion Survey.
The results suggest the Fed's 100 basis points of interest rate cuts last year may have helped encourage business borrowing, even as the effect on demand for other kinds of loans appeared limited.
For the commercial real estate sector banks reported both tighter lending standards and generally unchanged demand, the Fed said.
For households, banks reported weaker demand for real estate loans, perhaps an unsurprising development given the run-up in mortgage rates last quarter, as well as for credit card and other consumer loans, while demand for auto loans was little changed.
Fed officials had the survey results in hand last week when they decided to leave short-term borrowing costs unchanged in a range of 4.25%-4.50%.
They cited slower progress toward their 2% inflation goal, as well as a healthy labor market in little need of further monetary policy support, as well as uncertainty over the economic effects of policies under President Donald Trump.
(Reporting by Ann Saphir; Editing by Aurora Ellis)