Eurozone Business Borrowing Costs Rise as Cyprus Lags Behind

The Eurozone saw an increase in borrowing costs for businesses across the region in June, according to the European Central Bank (ECB). The composite cost-of-borrowing indicator for new corporate loans rose by 15 basis points to 3.79 percent in June.

In contrast, mortgage rates remained stable at 3.51 percent. Banks across the Eurozone raised returns on deposits, with the rate on fixed-term corporate deposits increasing by 17 basis points to 2.21 percent and household deposits climbing 13 basis points to 2.09 percent.

Cyprus' Central Bank (CBC) released its own June interest rate data, showing that deposit rates in Cyprus increased during the month but remained below Eurozone levels. The interest rate on household deposits with an agreed maturity of up to one year rose to 1.42 percent from 1.25 percent in May.

The CBC attributed the weak pass-through of ECB monetary policy to depositors to structural characteristics of the domestic banking system, including exceptionally high liquidity levels and the relatively small size of the sector.