ECONOMY

Credit expansion leads Cyprus Central Bank to keep interest rates unchanged

NICOSIA (Reuters) – Cyprus’s Central Bank kept interest rates unchanged yesterday for the fourth straight month, saying economic conditions did not warrant an adjustment. The key refinancing rate will remain at 4.50 percent, its Lombard rate also at 4.50 percent and its overnight deposit facility at 2.50 percent, Central Bank Governor Christodoulos Christodoulou told reporters. He said although economic conditions were unchanged, the rate-setting Monetary Policy Committee was concerned at rampant credit to the private sector. «Concerns of the MPC continue to be focused on the considerable expansion of money supply and credits to the private sector, which feeds an expansion of the deficit on the trade balance,» said Christodoulou. The decision to keep rates steady was unanimous, he said. Cyprus is widely seen as adopting the euro on January 1, 2008, and is expected to make further moves to cut the difference between its key rate and eurozone rates early this year. The European Central Bank (ECB) kept its interest rates at 3.5 percent on Thursday. The move was widely expected. ECB will probably wait until March to assess the latest economic growth data before raising interest rates again in a bid to tame inflation, a snap Reuters poll showed on Thursday.