ECB’s Escrivá: Our Rate Cuts Have Been Passed on to Corporate Borrowing Costs

14 March 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member José Luis Escrivá on Friday said the ECB’s policy easing had fed through to the cost of borrowing for companies.

Escrivá, who heads the Bank of Spain, said in a speech at a banking association event in Madrid that the ECB’s ‘decisive’ tightening had led to euro area inflation being ‘quickly brought back under control’ and that HICP was ‘currently close to the medium-term target of 2%.’

The policy easing this permitted ‘has been passed on to the cost of bank financing for companies’, he said, citing the drop in the average interest rate on new corporate loans.

This decrease in financing costs supported investment, he said, pointing to the 2% annual rise in lending to euro area firms as of January.

Europe, Escrivá asserted, ‘is at a turning point.’

‘The consolidation of the digital euro, the simplification and rationalisation of our regulatory framework, the mobilisation of bank credit, which is also necessary to support the expansion of defence spending, and the definitive push towards the Capital Markets Union are not only key elements to reinforce our financial autonomy, but also fundamental tools to strengthen the competitiveness of the European economy in an increasingly demanding global environment’, he said.

The financial sector had to be actively involved in all these ‘transformation processes’, he said. Complacency or inertia were impermissible, he said.

‘Europe's future will depend, to a large extent, on our ability to act with strategic vision, anticipating challenges and fully seizing the opportunities that lie ahead’, he said. ‘Now is the time to take that decisive step.’