Cyprus Economy Braces for Further Interest Rate Hikes Amid Ongoing War and Inflation Pressures

Cyprus's economy is facing increased inflationary pressures due to higher oil prices and the ongoing war in the Middle East, according to Cypriot economists.

The European Central Bank (ECB) could raise interest rates further if the situation worsens, they warned. University of Cyprus economist Sofronis Clerides said that the ECB's latest rate increase was expected given the inflationary trends seen in recent months.

However, he noted that if the war continues to worsen, there will be greater pressure on oil prices and consequently further interest rate increases in the coming months. The economists' warnings come as the ECB aims to return inflation to its 2% target by the end of 2027.