Cyprus continues to offer some of the lowest deposit interest rates in the eurozone, according to data published this week by the European Central Bank (ECB).

The report revealed that the interest rate for household time deposits of up to one year in Cyprus dropped to 1.76 per cent in October, down from 1.98 per cent the previous month.

This places Cyprus as having the second-lowest deposit rate in the eurozone, with only Slovenia offering a lower rate at 1.59 per cent.

In comparison, the average deposit rate for households across the eurozone stands at 2.74 per cent. The highest rates are recorded in Italy (3.69 per cent), Estonia (3.42 per cent), and Finland (3.15 per cent).

Meanwhile, Greece offers a rate of 1.84 per cent, placing it slightly above Cyprus.

The situation for business deposits is similar. Rates for non-financial corporations in Cyprus rose marginally to 2.19 per cent in October from 2.14 per cent in September.

However, this still represents the lowest rate in the EU, significantly below the eurozone average of 3.06 per cent.

While deposit rates lag behind, borrowing costs in Cyprus remain among the highest in the eurozone.

The average interest rate for home loans in October stood at 4.29 per cent, the fourth-highest in the eurozone. The eurozone average for housing loans is 3.50 per cent, with Greece offering a slightly lower rate at 3.77 per cent.

Business loans in Cyprus rank 10th highest in the eurozone, and consumer loans saw a significant increase, rising to 8 per cent in October from 6.5 per cent in September.

In contrast, Latvia recorded the highest rate for consumer loans, at 13.96 per cent.

The Central Bank of Cyprus (CBC) recently announced plans to enhance transparency by publishing detailed data on interest rates for deposits and loans offered by each credit institution.

Governor Christodoulos Patsalides, speaking on Monday before the House finance committee, explained that interest rates are influenced by the ECB’s monetary policy.

“However, the pace of rate adjustments in Cyprus is slower than the eurozone average,” Patsalides noted.

He attributed this discrepancy to several factors, including the small size of the Cypriot economy and excess liquidity in the banking sector.

“The small size of the economy contributes to slower rate adjustments compared to larger economies,” he said.

Finally, he also mentioned that the loan-to-deposit ratio in Cyprus stands at 49.3 per cent, significantly lower than the EU average of 106.5 per cent, further slowing interest rate adjustments.