Rates, inflation fall
Greek commercial banks started to cut their deposit and loan rates yesterday, following the lead of the European Central Bank (ECB), in a move expected to shake up local money markets. As money becomes cheaper, deposit yields are falling to minimal levels. Alpha Bank, the first to react to the ECB cut yesterday, has brought its deposit interest rates down to between 0.5 and 1.75 percent. At the same time, housing loan rates are now around 5.25 percent, while working capital loans have fallen to 6 percent. However, there is no clear indication that funds will be used for investments in order to minimize the threat posed by the impending global recession. The structural weaknesses of the Greek banking system are a further problem, as they hinder a reduction of the spread between deposit and loan rates, even during the current recession. According to all indications, there is an overall lack of faith in the course of the economy, and all those concerned, from companies to consumers, are on the defensive, keeping down expenses, displaying general restraint and – oddly, given the current state of deposit rates – banking their money fearing worse developments. This defensive attitude intensifies the recession, and is, perhaps, the first economic policy issue the government must tackle ahead of the tabling of the new state budget in Parliament on November 21. Meanwhile, the National Statistics Service yesterday released its latest inflation figures, according to which headline inflation fell to 2.8 percent in October. This was the first time this year that inflation has dipped below 3 percent. In September, the consumer price index was at 3.6 percent year-on-year. Analysts are optimistic that inflation could fall further this month, reaching 2.5 percent, with a slight rise in December. This could bring the annual inflation average to 3.4 percent. Doctors protest. The newly formed Union of Self-Employed Doctors of Attica (EELIA) yesterday said the Health Ministry’s plan to introduce private afternoon consultations at public hospitals would do away with the public nature of the National Health System and enlarge the black economy. EELIA president Giorgos Patoulis told a press conference that the move would transfer the cost of public health from the state to the people and create a two-tier system of doctors and patients. He also drew attention to the lack of sufficient organizational structures, nursing staff and equipment. Self-employed doctors are also concerned that hospital doctors seeing patients on a private basis in the afternoons will eat into private doctors’ incomes.