The Monetary Policy Committee (MPC) convened today and thoroughly reviewed all economic developments, especially those relevant to the monetary sector. In this context, the MPC also took into account the lifting of the remaining capital flow restrictions as of 1 May 2004.
The MPC reaffirmed that the Cyprus pound remains strong, confirming the general assessment that it is based on healthy economic fundamentals. Following its deliberations, the MPC decided to increase the official rates by one percentage point, thus sending a strong signal of support for the Cyprus pound against a background of unfounded rumours of an imminent devaluation. This decision renders Cyprus interest rates more attractive with positive repercussions, including increased capital inflows.
Specifically, the decision of the MPC is as follows:
The official rates of the Central Bank, that is the marginal lending facility rate and the deposit facility rate, are increased by one percentage point to 5,50% and 3,50%, respectively.