Cyprus Interest Rates: Convergence in Loans, Low in Deposits

The Central Bank of Cyprus (CBC) published a quarterly bulletin titled *"Cyprus Interest Rates in a European Context: Analysis and Comparison,"* comparing Cypriot interest rates with the Eurozone average.

According to the CBC, loan interest rates in Cyprus are approaching the European median, with small differences for households (0.09%) and businesses (0.44%). For new loans, interest rates for households are almost the same as the European median, while the difference for businesses is 0.24%.

Conversely, deposit interest rates remain the lowest in the Eurozone, due to the high liquidity of banks and the small domestic market. For example, the Liquidity Coverage Ratio (LCR) of Cypriot banks was 333% in December 2024, compared to 184% of the median in the Eurozone.

The CBC notes that the findings indicate a stabilization of borrowing costs, while deposit rates remain low despite monetary tightening.