Rate hikes by the European Central Bank are visible as the medium-term inflation target seems to be achieved, Central Bank of Cyprus (CBC) Governor Constantinos Herodotou said on Friday, stressing that any impact from the expected rate hikes in Cyprus will be manageable.
In statements following a meeting with the executive committee of trade-union SEK, Herodotou said the ECB medium-term target of inflation of 2% is achieved, adding that the situation is projected to normalise as the high inflation dynamics seem to be short-term.
However, he pointed out that inflation both in Europe and Cyprus “is fueled by the high energy prices which are difficult to be tackled easy or directly by interest rates.”
“But as the ECB medium-term target is achieved, rate hikes are visible,” Herodotou added, pointing out that the situation in Cyprus is “manageable because banks grant loans on the basis of payment capacity.”
Furthermore, invited to comment on the decision by banking employees trade-union ETYK to suspend a decision to hold a 24-hour strike in Hellenic Bank, Herodotou said it is important to have room for dialogue.
Recalling that this issue lies within the competencies of the Ministry of Labour, Herodotou added that from the CBC’s standpoint a bank should have a sustainable future.
“Therefore, the result of any negotiation should be seen in that context,” he said.
Source: Cyprus News Agency