Cyprus interest rates left unchanged

The Monetary Policy Committee (MPC) of the Central Bank’s Board of Directors decided to keep interest base rates unchanged at 4.5%.The official interest rates are set at the following levels:
* Minimum bid rate on the main refinancing operations (repo): 4.50%
* Interest rate on the marginal lending facility (Lombard): 4.50%
* Interest rate on the deposit facility: 2.50%
Following an in-depth assessment, the MPC noted that international and domestic developments were not substantially differentiated relative to the last MPC meeting on 1 September 2006 in order to justify a change in domestic interest rates. At the international front, the MPC considered that the European Central Bank proceeded to an interest rate rise by 0.25% at its latest meeting.
The Committee noted the decrease of inflation to 2.38% in September compared to 3.01% in August 2006, while for the period January to September inflation rate stood at 2.87% compared to 2.53% in the corresponding period of 2005.
Despite the positive price developments in September, inflationary pressures continue to exist, fuelled by higher oil prices, money supply and increased bank credit to private sector. As far as bank credit is concerned, the MPC stresses the exchange and interest rate risks involved in foreign currency lending.
Considering all the above, the MPC decided to maintain its wait and see stance and leave base rates unchanged at 4.5%.