Saturday, 04 April 2020 08:23

SL Central Bank Further Reduces Policy Interest Rates

Central Bank continues its stance of slashing policy interest rates amidst Corona virus crisis this month to support the ailing economy without giving much reasons



The Monetary Board of the Central Bank of Sri Lanka, on 03 April 2020, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 25 basis points to 6.00 per cent and 7.00 per cent, respectively, effective from the close of business on 03 April 2020.

This decision will complement the measures taken thus far to ease market conditions, and enable the domestic financial market to provide further relief to businesses and individuals affected by the outbreak of the COVID-19 pandemic and restrictions placed to contain its spread within the country, Central Bank announced short while ago.

It has earlier reduced the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 25 basis points to 6.25 percent and 7.25 percent, respectively, with effect from 17 March 2020.

The Statutory Reserve Ratio (SRR) on all rupee deposit liabilities of licensed commercial banks (LCBs) has also been reduced by 1.00 percentage point to 4.00 percent, with effect from the current reserve maintenance period.

“The Board arrived at this decision in consideration of the urgent need to support economic activity with the rapid global spread of the COVID-19 pandemic and its possible further spread in Sri Lanka,” the bank said in a statement at that time.

The surprise rate cut comes after the monitory authority slashed the key rates by 50 basis points in January to support the already ailing economy.

Economists expect Sri Lanka’s economic growth to slump to a near two-decade low in 2020.

(LI)

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