The Central Bank of Sri Lanka says it anticipates a faster and sizeable reduction in overall market lending interest rates in line with the monetary easing measures.
The bank pointed out that there could also be a turnaround in inflation due to the upcoming Budget 2024 and an increase in prices in the global petroleum market.
Addressing the media today (Oct 05), Central Bank Governor Dr. Nandalal Weerasinghe addressed some key questions, on inflation, policy interest rates, and debt restructuring.
Following are 5 key facts from the press briefing:
- Inflation –
There could be a turnaround in inflation due to the upcoming Budget 2024 and an increase in prices in the global petroleum market. However, under normal circumstances, inflation should be around 5%. This trend will continue. Reduced inflation means price stability, but does not result in reduced prices.
- Policy interest rates –
Market deposit rates and lending rates have come down in line with policy rates. The Central Bank expects the lending rates to come down further.
- Restructuring of state banks –
The Central Bank has not been informed of the restructuring of state banks as yet. State-owned banks will not be privatised. We are working with banks to find how they can raise more capital to support businesses going forward.
- EPF –
Any decision to make the Employees’ Provident Fund management independent and take it away from the Central Bank, as suggested by the International Monetary Fund, should be taken by the Parliament or Cabinet.
- Growth Projections-
The Central Bank Governor disputed the World Bank and IMF growth projections for Sri Lanka. Pointing out the projections in 2022, Dr. Nandalal Weerasinghe said the Central Bank had the closest projection at the time, hinting that the Central Bank’s projection should be followed. (NewsWire)