Rates stay unchanged for fourth month

THE CENTRAL Bank kept interest rates unchanged yesterday for the fourth straight month, saying economic conditions did not warrant an adjustment.

The key refinancing rate will remain at 4.50 per cent, its Lombard rate also at 4.50 per cent and its overnight deposit facility at 2.50 per cent, Central Bank Governor Christodoulos Christodoulou told reporters.

Christodoulou said although economic conditions were unchanged, the rate-setting Monetary Policy Committee was concerned at rampant credit to the private sector.

“Concerns of the MPC continue to be focussed on the considerable expansion of money supply and credits to the private sector, which feeds an expansion of the deficit on the trade balance,” said Christodoulou.

The decision to keep rates steady was unanimous, he said.

Cyprus is due to adopt the euro on January 1 2008, and is expected to make further moves to cut the difference between its key rate and eurozone rates in the coming months.

The European Central Bank kept its interest rates at 3.5 per cent on Thursday. The move had been widely expected.

The European Central Bank will probably wait until March to assess the latest economic growth data before raising interest rates again in a bid to tame inflation, a snap Reuters poll showed on Thursday.

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