Bank lending rates for both firms and households are currently at historical lows, and lending volumes experiencing an upward trend. Borrowing costs in vulnerable countries have been significantly reduced, reducing fragmentation and small and medium sized enterprises are especially benefitting from the increasing pass-through of policy rates to lending rates.
In this regard, monetary policy has had some success in mitigating the asymmetric impact of shocks. To give an example of the contribution of monetary policy to this easing in financing conditions, ECB staff estimate that lending rates to non-financial firms would be about 70 basis points higher absent our policies (Chart 2).