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Central Bank interest rates remain unchanged in last meeting ahead of Euro
2007-12-12 11:56:56

Nicosia, Dec 10 – Interest rates were left unchanged by the Central Bank’s Monetary Policy Committee (MPC) on Monday, meeting for what may be the last time. The Committee decided to maintain the official interest rates of the Central Bank of Cyprus (CBC), that is the minimum bid rate on the main refinancing operations, the interest rate on the marginal lending facility and the interest rate on the overnight deposit facility unchanged at 4,50%, 5,00% and 3,00%, respectively.

The MPC noted that recent economic developments did not warrant a change in domestic interest rates. In particular, inflation climbed to 3,53% in November, from 2,99% in October, partly as a result of the historically high oil prices, while inflationary pressures continue to be fuelled by the fast growth of the money supply and credit to the private sector.

The MPC, taking into account all the above, as well as the fact that the European Central Bank (ECB) maintained interest rates unchanged at its recent meeting, decided, unanimously, to maintain its waiting mode and keep the official interest rates of the Central Bank of Cyprus unchanged.

It is noted that based on the Euro Adoption Laws of 2007, as of 1 January 2008, the basic rates of the CBC will be replaced by the respective interest rates of the ECB. As a result, as of 1 January 2008 the minimum bid rate on the main refinancing operations, the interest rate on the marginal lending facility and the interest rate on the overnight deposit facility of the CBC will automatically be replaced by the respective interest rates of the ECB.

The Governing Council of the ECB in which the Governor of the CBC will participate as a full member will determine the aforementioned interest rates of the ECB, which will become applicable in Cyprus as of 1 January 2008, when Cyprus adopts the Euro as its currency.

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