Cyprus Central Bank expects further reductions in interest rates

Governor of the Central Bank of Cyprus Athanasios Orphanides said on Monday that in time there would be ''further significant reductions in loan interest rates,'' and expressed optimism that the Cypriot economy would not be affected to the degree the rest of Europe would by the global financial crisis.

''It was natural to firstly see a drop in deposit interest rates. We have already seen reductions in specific commercial bank products and loan interest rates, and I expect further significant reductions in loan interest rates in time,'' Orphanides told a press conference.

He added that there were many factors determining the interest rates in the market, one of which he cited as being the basic interest rates of the European Central Bank, which are already low.

Orphanides pointed out that he could not take any decisions concerning measures to increase low cost lending for businesses in Cyprus, adding that this was up to the government.

He noted that ''the Cypriot economy is doing much better than other economies in the EU and for this reason it was not necessary to take measures last year similar to those of other governments of EU members.''

''In Cyprus this crisis has affected us to a much lesser extent so far and I am optimistic that our economy will not be affected to the degree the rest of Europe is expected to be affected,'' he added, noting that this was greatly due to the close supervision of the banking system.

Replying to questions, Orphanides said the European Central Bank has made significant reductions in interest rates and has taken measures to help the Eurozone economy.

''There is room for further reductions in interest rates and so there is room for an expansive policy, with conventional measures, with the continuation and expansion of non conventional measures, which the European Central Bank is already implementing,'' he added.