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Central Bank reduces Lombard interest rate by 0.5%
2003-04-04 10:03:20

Nicosia, Apr 4 (CNA) - Central Bank Governor Christodoulos Christodoulou announced today the reduction by 0.5% of the marginal lending facility rate (Lombard) to 4.5% with a view to contribute to the recovery of the Cypriot economy.

Speaking to the press after the extraordinary meeting of the Monetary Committee, Central Bank Governor Christodoulos Christodoulou justified the decision, saying that ''by reducing this rate, the Committee judged that it could contribute to the joint effort and aim for the Cypriot economy's recovery''.

Christodoulou also announced that the Committee decided the reference value for the annual growth rate of bank credit remains at 11%.|

''The Committee decided to convene urgently due to the general acceptance that the war on Iraq will last more than originally anticipated and within this climate it is foreseen that the main Central Banks will proceed to further reductions of their interest rates within the current year'', Christodoulou noted.

He pointed out that ''the Committee foresees serious negative repercussion in the local economic activity, which at the current stage is difficult to be measured in an accurate manner''.

Christodoulou expressed the Committee's serious concern for the public economy's course and reiterated the need for fiscal consolidation and increased fiscal discipline.

The Governor said the Committee expressed its concerns over the rising inflation, which during the first three months reached 4.84%, adding ''this rise is attributed mainly to temporary and accidental factors''.

However, Christodoulou noted that ''despite its small size and vulnerability to international developments, the Cypriot economy has strong foundations and remarkable abilities as long as these are mobilised in time and are exploited accordingly''.

CNA/AAR/GS/RG/2003
ENDS, CYPRUS NEWS AGENCY

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