THE CENTRAL Bank yesterday cut interest rates to three per cent, in an effort to shield Cyprus from the shellshocks of a global recession.
As of Thursday, the Lombard lending facility will fall to 6.0 per cent and the deposit facility to 3.0 per cent, Central Bank Governor Afxentis Afxentiou announced yesterday evening.
” It is apparent that the world economy runs the risk of recession and this risk could also affect Cyprus,” he said.
Economists fear that the terrorist attacks on the US last week will shatter investor confidence, reduce the short-term outlook for growth and cause inflationary pressure.
Reducing interest rates is intended to counteract the damaging effects of such a situation.
The bank’s board and monetary policy committee convened an emergency meeting yesterday – just days after the monthly review when experts decided to keep rates unchanged.
On August 17, the Lombard lending facility had dropped 0.5 per cent to 6.5 per cent and deposit rates had fallen to 3.5 per cent.
Afxentiou said the bank had reviewed its decision after banks dropped rates overseas.
On Monday, the US Federal Reserve and European Central Bank cut US and euro zone rates to 3.0 per cent and 3.75 per cent respectively. They were followed yesterday by the Bank of England, which cut interest rates to 4.75 per cent, and the Bank of Japan.
The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.
