ECONOMYNEXT – Sri Lanka’s central bank said it is removing price controls on rupee lending rates from April 01, amid continued falls in market rates.
The central bank said the price control order on rupee denominated lending products issued in August 2023 “contributed to reducing the overall market lending interest rates and therefore yielded the expected results.”
The order will be removed, as it is “no longer relevant in the context of further monetary policy easing since its implementation, and with a view to moving away from administrative measures towards market-based instruments as the economy normalizes,” the central bank said.
Interest rates have now fallen to lower levels than envisaged, Governor Weerasinghe said.
The central bank now expects further falls in rates, he said.
Sri Lanka’s central bank has been operating net deflationary policy and rates have fallen in line with domestic credit conditions and increasing confidence generated by central bank as well as better budgeting and state enterprise management analysts say. (Colombo/Mar26/2024)