Interest rates in Cyprus continues its steady rise

Interest rates in the Cypriot banking system continued rising in December in the context of the ECB’s monetary normalization policy to tackle high inflation.

According to data published by the Central Bank of Cyprus (CBC), the interest rate on deposits from households with an agreed maturity of up to one year recorded an increase to 0,35%, compared with 0,12% in the previous month, recording an increase of 0.23 basis points.

The corresponding interest rate on deposits from non-financial corporations rose by 20 basis points reaching 0.61%, compared with 0.41% in the previous month.

Interest rates for new loans continued rising, with the exception of loans over €1 million for non-financial corporations.

In particular, the interest rate on consumer credit increased to 4.21%, compared with 3.84% in the previous month, whereas rates the interest rate on loans for house purchases increased to 3.34%, compared with 2.95% in the previous month.

According to the CBC, the interest rate on loans to non-financial corporations for amounts up to €1 million increased to 4.71%, compared with 4.52% in the previous month.

On the contrary, the interest rate on loans to non-financial corporations for amounts over €1 million registered a decrease to 3.52%, compared with 4.35% the month before.

Meanwhile, the European Central Bank announced today that it raised interest rates by 50 basis points, confirming analysts' expectations. It was the second 50 basis point increase in a row, bringing the deposit rate to 2.5% and the refinancing rate to 3%, even though inflation in the eurozone is slowing and the Federal Reserve cut the pace of its own rate hikes, to 25 basis points, last night.

In fact, the statement issued by the European Central Bank makes an unusual move, announcing another 50 basis point increase at its next meeting in March, and adding that the ECB will then review the path of its monetary policy.

The ECB pledged to "continue to raise interest rates significantly and at a steady pace" after it moved to four rate hikes in 2022, pulling the cost of money out of the negative territory for the first time since 2014.

[With information from CNA and Kathimerini.gr]