Cyprus central bank leaves euro spread at 100 bp

The Monetary Policy Committee (MPC) decided on Friday that the official interest rates of the Central Bank of Cyprus, the interest rates on the marginal lending facility would remain unchanged at 4.25%. The minimum bid rate on the main refinancing operations remains at 3.25% and the deposit facility remains unchanged at 2.25%.

All rates are 100 basis points above equivalent rates in the eurozone.

Announcing the decision, Central Bank Governor Christodoulos Christodoulou said the MPC noted that both international and domestic economic developments have not substantially changed since its last meeting on December 2, 2005 so as to warrant a change in domestic interest rates at this juncture.

With regard to international developments, he said the MPC took into serious consideration the wait-and-see stance adopted by the European Central Bank and the Bank of England at their respective meetings on Thursday.

Neither the European Central Bank nor the Bank of England altered rates on Thursday.

On the domestic front, the MPC noted the fall in inflation to rate 1.99% in December compared with 2.87% in the previous month.

For the whole 2005, inflation reached 2.56% compared with 2.28% in 2004.

“The MPC also noted the satisfactory growth in economic activity and bank credit,” said Christodoulou.