Oct 19, Colombo: Following the significant reduction in the interest rates by the Central Bank of Sri Lanka, the Commercial Bank is expected to reduce interest rates accordingly.
Director of the Central Bank Research Institute Mrs. Swarna Gunarathne has said that the interest rates of the Commercial Banks should also be reduced proportionately to the Central Bank rates.
The Monetary Board of Sri Lanka's Central Bank earlier Tuesday decided to further relax monetary policies amid low inflation and reduce policy interest rates aiming to boost economic growth.
Accordingly, the Central Bank with immediate effect reduced both Repurchase and Reverse Repurchase rates by 50 basis points. The new Repurchase Rate is 6.50 percent and the Reverse Repurchase Rate is 8.50 percent.
Mrs. Gunarathne said that the Commercial Bank interest rates should also be reduced by 0.5 percent in proportion to Central Bank's reductions. She noted that the credit provided by commercial banks for businesses and investment in the private sector has not yet come to the desired level.
The monetary authority hopes to encourage new businesses and investments through interest rate reduction.