At today’s meeting of the Monetary Policy Committee (MPC), the following monetary policy decisions were taken:
The official interest rates of the Central Bank of Cyprus, that is the interest rates on the marginal lending facility and the deposit facility, remain unchanged at 4,25% and 2,25%, respectively.
During its meeting, the MPC expressed its deep concern about the continuing upward trend in oil prices and its potential downside. With regard to domestic developments, the MPC noted that economic growth and the growth of bank credit remain at satisfactory levels. Inflation accelerated slightly to 2,11% in August, compared with 1,91% in July and 1,70% in June, and for the first eight months of the year it reached 2,48% compared with 1,91% over the same period of 2004. The MPC also noted the significant foreign currency inflows, which were partly due to seasonal factors, and the consequent appreciation of the Cyprus pound against the euro.
In view of the above and the wait-and-see stance adopted by the European Central Bank, the MPC decided, by a majority vote, to leave official interest rates unchanged.