Cyprus Central Bank keeps interest rates unchanged
Nicosia, Oct 8 –The Central Bank of Cyprus has kept interest rates unchanged and Central Bank Governor Dr. Athanasios Orphanides has said that the key refinancing rate remained at 4.50%. The Bank left the Lombard rate at 5.0 percent and its overnight deposit facility rate at 3.0%.
Figures show consumer inflation in September was running at 2.63% from 2.47% in August and 2.43% in July. For the first nine months of the year inflation reached 2% compared to 2.87% in the corresponding period last year.
''Inflationary pressures continue to be fuelled by high oil prices and some food categories as well as the rapid expansion registered in money supply and loans to the private sector,'' Dr. Orphanides stated.
Credit to the private sector was contributing to high real estate prices and a widening of the trade deficit and was a cause of concern, he noted.
Dr. Orphanides said robust credit expansion was fuelling inflationary pressures. ''Our economy is overheating and this will lead in the next few months to further inflationary pressures,'' he said.
The Central Bank Governor urged the government to be prudent with fiscal policy. ''With our euro area accession, our ability to keep inflation at bay with monetary policy will be reduced and we need to be assisted by fiscal policy in the short run,'' he said.
Cyprus will enter the Eurozone on 1st January 2008.