ECONOMYNEXT – The Central Bank has sought explanations from some banks which have not cut rates as fast as required by an order issued last year, Governor Nandalal Weerasinghe said.
“It may have been lower than what we anticipated when we issued these orders back in August; Some banks had already started the process of bringing down interest rates. Other banks that have not started the process we have asked them to bring it down by 350 basis points by December.”
“There are a lot of banks that have reduced, but not to the extent that we hoped. We are closely monitoring the banks and we want all the bank to follow the instructions we have issued.”
T-bill rates have also not fallen as much as expected.
Weerasinghe conceded that when the order was issued “we also had expectations about where the other market rates would be; for example yield rates, we expected a further decline but that did not happen. So there’s an impact on other factors.” (Colombo/Jan23/2024)