CBSL threatens administrative measures to bring down market rates

COLOMBO: Sri Lanka’s central bank has threatened administrative intervention to control high market interest rates that it regarded as out of line with its policy rates and the outlook for falling inflation, Reuters reported.

Any such action, interpreted by economists as a downward push, would cut high deposit rates and borrowing costs for business – and eventually, as depositors sought alternatives, for the government of the crisis-hit country.

The Central Bank of Sri Lanka (CBSL) also confirmed an expected decision to hold its two policy rates steady, citing a need to curb demand in the economy. The Standing Lending Facility rate was kept at 15.50% and the Standing Deposit Facility Rate at 14.50%.

“The Board noted with concern the anomalous rise in market interest rates, particularly deposit interest rates and short-term lending interest rates …” the CBSL said in a statement announcing its policy decision.

“If an appropriate downward adjustment in the market interest rates would