US banks maintain tight leash on loans

WASHINGTON: The United States Federal Reserve said US banks kept tightening lending standards for companies and consumers last quarter, reinforcing the central bank's decision to leave its benchmark interest rates at record lows for a long time.

At the same time, the number of banks making it tougher to borrow diminished, the Fed said in its quarterly Senior Loan Officer survey. Demand for most types of loans weakened at a smaller number of banks than in the second quarter, the survey showed.

The report helps explain why Fed policy makers last week said "tight credit" remained a drag on the economy and pledged to keep their benchmark interest rate near zero for an "extended period". JP-Morgan Chase & Co is among the banks that have reduced lending in response to stricter underwriting standards for consumer loans and lower demand among companies.