Today’s meeting of the Monetary Policy Committee (MPC) took place under the shadow of yesterday’s terrorist acts in the United Kingdom. The Committee expressed its intense condemnation of these acts and its sympathy to the British people.
At its meeting, the MPC took the following monetary policy decisions:
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.
Following an in-depth assessment, the MPC noted that both international and domestic economic developments have not substantially changed since its last meeting on 9 June 2005 so as to dictate a change in domestic interest rates at this juncture. With regard to the international developments, oil prices remain a cause of concern, while the MPC took into serious consideration the wait-and-see stance adopted by the European Central Bank and the Bank of England at their respective meetings yesterday. On the domestic front, the MPC also took stock of the encouraging developments recorded in prices, which resulted in the retreat of inflation to 1,7% in June, compared with 2,8% in the same month of 2004. For the first half of the year, inflation reached 2,6% compared with 1,5% registered over the same period of 2004.
In view of the above, and also taking into account the two recent significant interest rate cuts, the MPC decided to adopt a wait-and-see stance at this juncture, maintaining the official interest rates unchanged.