(Bloomberg) --
The unprecedented reduction in Polish borrowing costs in response to Covid-19 isn't perking up borrowing.
Despite interest rates being slashed to a record 0.1%, annual lending growth in May among households hit a two-year low, data released Tuesday showed. Monthly slumps in retail and corporate credit were the worst since 2015 and 2009 respectively.
The blockage is both supply- and demand-based. Borrowers are more cautious amid rising unemployment, bankruptcies and the risk of a second wave of virus infections. Banks, meanwhile, are seeing profits plummet and credit risk increase.
“We have more difficult access to loans, paradoxically, despite the lowest interest rates in history,” according to Bank Pocztowy chief economist Monika Kurtek. The situation among lenders has “led to a tightening of the criteria for granting loans,” she said.
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