How the interest rate cuts are expected to affect the Cyprus economy

The European Central Bank’s (ECB) decision to reduce interest rates by 0.25% is expected to have a positive impact on the Cyprus economy, according to University of Cyprus professor Sofronis Clerides.

In an interview with the Cyprus News Agency, Clerides said we should now expect a reduction of borrowing rates, though he wasn’t too sure about deposit rates, since, as he said, during the last two years of constant hikes by the ECB, borrowing rates in Cyprus increased accordingly, while deposit rates to a much lesser degree.

According to Clerides, the ECB’s decision had been widely anticipated given the various statements being made since the beginning of the year; though as inflation showed signs of stabilising in recent weeks, there were some concerns over whether the rate cuts would be going ahead after all.

But as Clerides pointed out, the ECB made sure to clarify that this didn’t mean the reductions would continue, especially given how the rate at which inflation has been reducing decelerated in recent weeks.

“This has created some concerned, in the sense that while at the beginning of the year, around two-three months ago, many were speaking of a series of reductions on the way, starting from June; now the first reduction has arrived, but with a reservation about the next moves,” he explained.

And so, we will have to see how things go with inflation over the next two to three months to reach safer conclusions, said Clerides.

Read More

Eurobank is getting ready to 'make its mark' on Hellenic Bank
Bank of Cyprus eyeing Athens Stock Exchange return as it "considers all options"
Cyprus had highest concentration of firms with cross-border investment activity in 2023
Omri Nir: Prop trading a key trend for brokerage industry in next couple of years
Moody's upgrades Bank of Cyprus' long-term deposit ratings to Baa1
Liquidator figures outline the anticipated outcome as Laiki’s shares in the Bank of Cyprus are liquidated
Assets under Management of Collective Investments at €9.1b in Q1
John Georgoulas: Cyprus’ technology sector has huge potential but needs more help from state & universities
CBC maintains prudent policy on dividend payments
Fitch Upgrades Hellenic Bank to 'BBB-' with stable outlook