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The Central Bank of Cyprus (CBC) has announced that the official reference interest rate will be set at 11.50%. This means that banks and other lenders in Cyprus must not charge higher rates than this when offering loans, extending payment terms, or renewing loans. If anyone breaks this rule, they could face serious consequences, including up to five years in prison or a fine of up to €30,000.
This move comes as the European Central Bank (ECB) is making big changes to its interest rates in an effort to support the struggling eurozone economy. On Thursday, the ECB cut rates for the fifth time since June and said they expect to lower rates even further in March. The goal is to help the economy grow, as many countries in the region are seeing slow growth and weak consumer spending.
For Cyprus, this decision by the CBC to set the interest rate at 11.50% adds an extra layer of protection for people borrowing money. By preventing lenders from charging too much, the CBC is trying to make sure that Cypriots don't get stuck with high, unfair loan charges. This move also keeps Cyprus in line with the ECB’s efforts to help the eurozone economy, ensuring that local financial practices stay stable and fair.
As the ECB continues to cut rates, the CBC’s new rules are expected to protect Cypriot consumers and help keep the local economy stable. By tightening control on loan interest rates, Cyprus is helping ensure that its citizens are not taken advantage of by unfair lending practices.
*With info from CNA and Reuters
