The Central Bank of Cyprus has presented significant findings on Cypriot interest rates compared to the eurozone average in its quarterly bulletin titled “Cypriot Interest Rates in European Context: Analysis and Comparison”.
The bulletin utilises statistical data from the Central Bank of Cyprus itself and the European Central Bank to enhance understanding of interest rate trends in the Cypriot banking system and determine their position within the European framework.
Lending rates converge with European median
According to the Central Bank of Cyprus, lending rates on existing balances in Cyprus are approaching the corresponding eurozone median. The margin stands at just 0.09 percentage points for households and 0.44 points for non-financial corporations.
Regarding new lending, the average rate for households is almost identical to the European median, whilst for businesses the margin is limited to 0.24%, although greater fluctuation is recorded due to smaller data dispersion.
Deposit rates remain eurozone’s lowest
Conversely, deposit rates in Cyprus—both on existing balances and new deposits—remain consistently the lowest in the eurozone, according to the Central Bank of Cyprus. This deviation is attributed to significant bank liquidity as well as the comparatively limited scope of the domestic banking market.
Indicatively, the Liquidity Coverage Ratio of Cypriot banks in December 2024 reached 333%, compared to 184% of the median and 163% of the average in the eurozone.
Findings confirm stabilisation
The Central Bank of Cyprus notes that these findings confirm the stabilisation of borrowing costs within European frameworks, whilst deposit rates remain at historically low levels despite monetary policy tightening conditions.