in-cyprus 27 December 2022 - by Annie Charalambous
Bank clients in Cyprus expect deposit rates to rise substantially within the new year considering that those on borrowing marked a total of four increases in 2022, Philenews reported on Tuesday.
The interest rate on deposits from households with an agreed maturity of up to one year in December had recorded an increase to 0,19%, compared with 0,11% in the previous month.
The corresponding interest rate on deposits from non-financial corporations registered an increase to 0,47%, compared with -0,09% in the previous month.
The year ends with a total of four rises in the cost of borrowing, with the floating rate at 2.5%.
As for the interest rate on savings it managed to move slightly up and in cases where it was negative it did turn positive but just slightly.
Borrowers are beginning to feel the burden of the interest rate increases while depositors feel their money is losing the value they have deposited in banks.
Mainly because of two reasons: the value is decreasing due to inflation and the money is accruing interest at rates marginally above zero.
Banks in Cyprus have already taken several million euros from the excess liquidity they had at the European Central Bank.
That is, money that up until about two years ago they were paying for simply to have it deposited with the ECB.
Since July 2022, the negative interest rates have stopped and now the banking system is moving to positive interest rates but just slightly higher.
