ECB Rate Hike May Slow Down Decline in Montenegrin Interest Rates

The European Central Bank's (ECB) recent decision to raise key interest rates by 0.25 percentage points may slow down the decline in domestic interest rates in Montenegro, but a sudden change is not expected.

According to the Central Bank of Montenegro (CBCG), the direct exposure of the domestic banking system to changes in European interest rates is limited due to a small share of loans with variable interest rates and the method of financing banks.

The CBCG explained that the dominant part of loans in Montenegro has a fixed interest rate, while loans with variable or variable interest rates account for only 6.12% of total loans.

This means that an increase in the ECB's key interest rates does not automatically lead to an increase in loan installments for citizens repaying loans.