ECB Raises Rates as Cyprus Households Face Higher Loan Costs

The European Central Bank (ECB) has raised its key interest rates for the second time this year, increasing the cost of borrowing for households in Cyprus. The decision aims to combat inflation, which is expected to remain above the bank's target of 2% for an extended period.

The increase of 0.25 percentage points will affect variable-rate mortgages, business loans, and other borrowing linked to European rates. Borrowers with €150,000 left on a 20-year mortgage could see their monthly repayments rise by around €20 if the full quarter-point increase is passed on.

Cyprus households are already struggling with higher supermarket bills, electricity costs, and petrol prices due to the ongoing conflict in the Middle East. The war has disrupted energy markets and pushed oil prices above $100 a barrel, affecting transportation costs, airline tickets, and the price of goods on supermarket shelves.