KEY TAKEAWAYS: Banks expect business loan demand across all categories to strengthen this year, a Fed survey shows. Loan demand rose among large and mid-sized firms but was flat for small businesses. Banks do not expect further tightening in lending standards, easing a drag on credit growth. L enders reported greater willingness to extend credit to firms with high AI exposure.   Banks expect demand for business loans across all categories to strengthen this year, a Federal Reserve survey showed on Monday, with most saying they expect lower interest rates and higher spending or investment needs will drive that trend. Business loan demand from large and medium-sized firms rose in the fourth quarter, the Fed’s quarterly Senior Loan Officer Opinion Survey found, while from small firms demand was flat. Households expressed weaker demand for most kinds of loans, although demand for credit cards was unchanged, the survey showed. The survey also showed that while banks generally tightened lending standards for businesses in the fourth quarter, they generally did not expect further tightening this year, removing what had been a limiting factor for credit growth last year. On net, the survey showed, banks reported being more likely to lend to firms that have high exposure to artificial intelligence. The Fed last week left the benchmark short-term borrowing rate in its current 3.50%-3.75% range, and it signaled a stabilizing labor market and higher-than-optimal inflation would likely keep it from cutting rates again for some time. Policymakers had the loan officer survey in hand when they made their rate-setting decision.  (Reporting by Ann Saphir; Editing by Cynthia Osterman) ...read more read less