CBSL urges banks to pass January rate reduction benefits to market

The central bank yesterday (05) urged banks to pass benefits from the last round of rate cuts to borrowers without any further delay. “We urge commercial banks to pass the benefit of our policy rate reduction in January to the borrowers without any further delay. At the same time, the Monetary Board extended an assurance to the market that adequate liquidity in domestic financial markets will be maintained to weather any impact arising from global developments, particularly due to the spread of the coronavirus (COVID-19). We have observed policymakers in many economies respond to the rapid spread of the virus, and it is expected that these accommodative measures continue until the global economy shows clear signs of recovery from the current fragile state,” Central Bank Governor Prof. W. D. Lakshman told media whilst addressing the monetary policy meeting in Colombo yesterday(5). Meanwhile,  Dr. C Amarasekara, Director, Economic Research Department of the Central Bank of Sri Lanka also expressed the following. “With regard to interest rates we have seen a general decline in market lending rates and we have also seen new deposit rates increasing. However, the reduction in policy interest rates in January is yet to be reflected in market lending rates. Therefore, let me reiterate the Governor’s message that commercial banks must pass the benefit of the policy rates reduction to the borrowers without delay. This is important particularly in consideration of the possible decline in demand for credit from further spread of the coronavirus effect.”

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