Bank lending rates to non-financial corporations (NFCs) have been trending downwards since the third quarter of last year. By the end of last year, the composite cost of borrowing indicators in Italy and Spain had declined by approximately 70 basis points and 50 basis points, respectively, when compared to the middle of the year.
This should be seen in a context where lending rates in these countries had not been very responsive to monetary policy actions for at least three years. These developments coincided with the first targeted longer-term refinancing operation (TLTRO) and the announcement of the asset-backed securities purchase programme (ABSPP) and covered bond purchase programme (CBPP3).