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Cyprus Sees Highest Term Deposit Rate of 2.45% in August Amid Rising Interest Trends

by THEFUTURE.TEAM

October 15, 2024

The Central Bank of Cyprus has reported a significant rise in term deposit rates, with the highest rate recorded at 2.45% in August 2024. This uptick in interest rates comes as part of broader trends across Europe, where central banks are responding to persistent inflationary pressures by tightening monetary policies. Cyprus, like many other countries, is adjusting to these global financial shifts, and the increase in deposit rates could signal both opportunities and challenges for its economy.

The 2.45% rate represents the highest return on term deposits in recent years, reflecting not only the response to European Central Bank (ECB) interest rate hikes but also the demand for more secure savings options among Cypriot citizens and businesses. As inflation has eroded purchasing power across the Eurozone, the appeal of term deposits, which offer a guaranteed return over a fixed period, has increased. Savers are seeking stability in an uncertain economic environment, and banks are raising rates to attract these depositors.

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However, while higher term deposit rates may benefit savers, they also point to broader financial dynamics that need to be understood within the Cypriot context. Rising interest rates are a double-edged sword. On the one hand, they offer consumers and businesses better returns on savings; on the other hand, they also raise borrowing costs, which can stifle investment and economic growth. For businesses relying on loans for expansion or operational needs, higher rates can create cash flow pressures, potentially slowing down the momentum of Cyprus’ economic recovery post-pandemic.

The Central Bank’s figures also shed light on the broader monetary environment in Cyprus. The country’s banking sector has experienced both growth and consolidation in recent years, following the reforms instituted in the wake of the 2013 financial crisis. A key question now is how these rising deposit rates will impact liquidity in the system, especially as consumers may prefer saving over spending or investing in riskier assets.

For the average Cypriot saver, this increase in term deposit rates provides an opportunity to shield their savings from the effects of inflation. However, the question remains whether this trend will be sustainable in the long term. As central banks across Europe balance inflationary concerns with the need to sustain economic growth, Cyprus will need to navigate these evolving financial waters carefully.

The increase in term deposit rates in August represents a significant moment for the Cypriot economy, potentially signalling a shift towards more conservative financial planning among businesses and consumers. As the country continues to adjust to external financial pressures, these trends will be crucial in shaping the future of the Cypriot banking sector and the broader economy.

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Industry Uproar Over Reduction in Electric Vehicle Subsidies

by News Editor

April 26, 2025

The recent move by the government to curtail subsidies for electric vehicles has stirred significant discontent among car importers in Cyprus. The Department of Road Transport (DRT) has slashed available grants under the Electric Vehicle Promotion Scheme as of April 23, leading to a rapid depletion of the subsidy pool and leaving many potential applicants disappointed.

Importers’ Concerns

According to the Cyprus Motor Vehicle Importers Association (CMVIA), the lack of transparency and failure to engage stakeholders prior to the decision have eroded trust in the government’s commitments. Importers now find themselves facing a precarious situation, with substantial stocks of electric vehicles and mounting promotional expenditures.

Public Interest and EU Compliance

Although the scheme aimed to support the transition to zero-emission transport until 2025, the DRT states that the curtailing of funds was necessary to comply with European funding terms, which warned against delays in vehicle deliveries. This decision has fueled market uncertainty despite the application portal experiencing dynamic changes.

Industry’s Ongoing Demand

The CMVIA refutes any claims suggesting waning interest in electric vehicles, underscoring the rapid exhaustion of available grants as proof of substantial demand. They highlight the importance of meeting Cyprus’s green transition targets, including putting 80,000 electric vehicles on roads by 2030.

While the total budget for subsidies saw an increase to €36.5 million in 2023, thanks to additional funding, ongoing difficulties in timely vehicle distribution have led to premature closures of applications. In response, CMVIA has called for urgent dialogue with the Minister of Transport to reassess the decision, fearing that it could endanger the future of e-mobility in Cyprus.