ECONOMY

Cyprus rate cut — again

NICOSIA (Reuters) – Cyprus’s central bank unexpectedly cut interest rates for the second time in a month yesterday in a move analysts said was aimed at preventing a strengthening Cyprus pound nudging the brink of its band against the euro. At an unscheduled meeting, the central bank lowered rates by 50 basis points, bringing its minimum bid rate to 3.25 percent. This reflected significant foreign currency inflows and a marked strengthening of the Cyprus pound against the euro, the bank said. Analysts interpreted the move as a pre-emptive strike against further strengthening just as the crucial tourism season is starting and to keep the lid on excessive volatility either side of its parity rate against the euro. Cyprus entered the European Exchange Rate Mechanism (ERM-2), a proving ground for the euro, on April 29 at a parity rate of 0.585274 pounds to the euro.