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Banks in the United States tightened lending standards and terms for both business and consumer loans over the past three months out of concern about a weakening economic outlook, according to a Federal Reserve survey issued on Monday.

The April survey of senior loan officers at 56 domestic banks and 21 U.S. branches and agencies of foreign banks also underlined that demand for loans from businesses and consumers weakened — though not as markedly as in the January report.

“Substantial majorities of domestic and foreign respondents pointed to a less favorable or more uncertain economic outlook and to a worsening of industry-specific problems as reasons for tightening their lending standards on C&I (commercial and industrial) loans over the past three months,” the Fed said.

Fed policy-makers may have had the outlines of the loan officers’ report when they decided last week to reduce official interest rates another quarter percentage point. At the time, the Fed hinted it might halt its rate-cut campaign while it assesses whether the 3.25 percentage points by which it has lowered rates since September will spur growth.

The Fed reported tighter lending in its January loan survey, and the April survey shows tightened credit continues to be a problem for the U.S cheap payday loans. economy, which has grown at only a 0.6 percent rate during each of the last two quarters due to the drag from a deep housing crisis.

“About 35 percent of domestic banks and 45 percent of foreign institutions — somewhat larger fractions than in the January survey — noted that concerns about their bank’s current or expected capital position had contributed to more stringent lending policies over the last three months,” the Fed said.

PUMP PRIMING

The U.S. central bank, and its counterparts in major industrial economies around the world, have taken a variety of measures to pump liquidity into the banking system while policy-makers have urged financial institutions to keep lending. 

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