Credit for house purchase posted a year-on-year fall of 2.7%, declining almost 1 pp more than in February. The yearon-year growth rate of consumer credit, which stood at 15% in February, fell as low as 2.5% in May. In June it grew by 2.3%, owing especially to drawdowns of credit facilities, since new lending continued to move on a downward path. However, in the coming months we will inevitably witness a deterioration in the credit quality of banks’ balance sheets, as a result of the sharp contraction in the income of non-financial corporations and households over recent months. Indeed, this deterioration is expected to intensify when the moratoria end or the grace period on guaranteed loans expires. The volume of NPLs in the private non-financial sector continued to fall at a year-on-year rate of 11% in June, although this was 8 pp less than the decline in February. The NPLs in banks’ business in Spain increased by 2% between March and June this year, with no major differences between firms and households. Although the increase in NPLs traditionally lags behind the onset of recessions, this increase is very contained considering the scale of the fall in GDP. Undoubtedly, the measures implemented, particularly guarantee schemes for firms and payment holidays for individuals, are significantly reducing the immediate rise in newly classified NPLs. Reclassifications of NPLs which in recent years significantly reduced the NPL ratio, have also fallen, owing to less activity in the impaired assets market.
As the fed funds chart shows, market expectations for monetary policy are very sensitive to changes in the economic setting – consider the shifts in the shape of the federal funds over time. Thank you for your attention. 4  BIS central bankers’ speeches  BIS central bankers’ speeches  5  6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  23  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15  16  BIS central bankers’ speeches  BIS central bankers’ speeches  17  18  BIS central bankers’ speeches  BIS central bankers’ speeches  19  20  BIS central bankers’ speeches  BIS central bankers’ speeches  21