ECB pass-through models show that, since the launch of our credit easing package, the decline in lending rates in Spain and Italy in particular has been much stronger than can be explained by falling market rates alone. Tightening sovereign spreads help explain much of the observed fall.
This effect, paired with the credit impulse provided by the TLTROs, has also helped boost competition among banks and put further downward pressure on lending rates. Evidence from the BLS confirms that rising competitive pressures have been a key contributor to margin compressions over the last two years.