Cyprus rates stay put

NICOSIA (Reuters) – Cyprus’s central bank kept its key refinancing rate unchanged at 3.25 percent during a monthly review yesterday as soaring oil prices weighed on inflationary concerns. But governor Christodoulos Christodoulou said the decision was only approved by three votes to two, with those in the minority arguing for a cut. «Three members were in favor of rates staying as they were, two members were in favor of possibly looking at a slight drop,» Christodoulou told journalists. «There were strong arguments for both cases.» The bank’s deposit rate would remain at 2.25 percent and its advances rate at 4.25 percent, Christodoulou said. Currency markets had not anticipated an adjustment. Cyprus closely watches operations of the European Central Bank, which on Thursday kept interest rates steady at 2 percent in the face of runaway oil prices. The Mediterranean island is a member of the European Exchange Rate Mechanism (ERM 2), a stabilization band which anchors currencies to the euro at a central reference rate and allows it to fluctuate within certain limits. In Cyprus’s case, its pound fluctuates 2.25 percent around the euro, and in recent days the pound has stabilized at around 2.11 percent over the euro, Christodoulou said.