Banks Are Doling Out Fewer Business Loans
- Commercial and industrial loan growth shrank 0.2% in September
- Fed rate hikes are helping to tighten credit market conditions
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US banks are doling out fewer loans to businesses as lending standards tighten and demand weakens after 11 interest-rate hikes by the Federal Reserve, suggesting that economic growth could slow as credit contracts.
The volume of commercial and industrial loans that banks dish out to companies shrank by about 0.2% in September, marking a sixth straight month of declines, according to the Fed’s latest batch of H8 data. The extended stretch of declines is spurring some market watchers to fret that the economic deceleration the Fed has been trying to engineer to curb inflation is now closer on the horizon, and may turn out to be quite painful.