Cyprus keeps rates steady

The Monetary Policy Committee (MPC) of the Central Bank of Cyprus has decided that 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 remain unchanged at 4,50%, 4,50% and 2,50%, respectively.
Following an extensive discussion, the MPC noted that international and domestic developments have not substantially changed since its last meeting on 12 January 2007, so as to warrant at this juncture a change in domestic interest rates. The global economy is continuing to exhibit sings of robust growth, despite the moderation in the growth rates of some countries, such as the USA and the UK. Inflation continued on a downward trend, mainly on account of the decline in energy prices. Within this environment, most of the major central banks maintained their interest rates unchanged at their recent monetary policy meetings. A similar picture can be drawn for the domestic front, with decelerating inflation and satisfactory growth rates. In particular, domestic inflation stood at 1,64% in January compared with 2,25% in the same month of 2006. The concerns of the MPC remain focused on the sizeable expansion of money supply and credit to the private sector, which contribute to the widening of the trade deficit.
Taking into account all the above, the MPC decided with a majority to adopt a wait-and-see stance at this juncture, leaving the official interest rates of the Central Bank of Cyprus unchanged.