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21 June, 2024
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Why the high interest rates when inflation is low?

Finance Minister, Makis Keravnos, criticizes unjustifiable borrowing costs amid low inflation and economic resilience


Finance Minister Makis Keravnos has criticized the high lending rates in Cyprus, calling them unjustifiable given the country's relatively low inflation. In an interview with the Sunday edition of "Phileleftheros," Keravnos highlighted the challenges posed by the Eurozone's unified monetary policy.

"For a Eurozone country with relatively low inflation like Cyprus, very high borrowing rates are not justified," Keravnos stated. He pointed out that the Eurozone's monetary policy often creates complications, including the current high lending rates.

Keravnos revealed that he raised this issue during Eurogroup meetings, where other Finance ministers positively received his concerns.

He also emphasized that the latest spring forecasts from the European Commission indicate that Cyprus's economy is on the right track. "Our goal is to maintain this positive trajectory while recognizing the multifaceted challenges we face," he added.

While respecting the independence of the Central Bank of Cyprus, Keravnos acknowledged that he has frequently advised banks to reassess their interest rate policies. "Our interventions have yielded results, with banks adopting measures to absorb some of the increased costs from high interest rates and adjusting deposit rates," he noted.

Addressing geopolitical risks, Keravnos stated that the government's measures are comprehensive, covering sectors such as tourism and energy. He pointed out that balanced economic policies have contributed to maintaining the economy's resilience, achieving positive growth rates, and gradually bringing inflation under control.

[With information from CNA]

Cyprus  |  economy  |  banks

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