By Nishel Fernando
Dr. Nandalal Weerasinghe, who is expected to take over as the new Central Bank Governor, is likely to grant a 500-750 basis point hike in policy interest rate at the next monetary policy review meeting, in order to stabilise the rupee and curb double-digit inflation, First Capital Research (FCR) weighed in.

“With the appointment of Dr. Weerasinghe as the new CB Governor, it’s likely that the Monetary Board will go for a 500-750 basis point rate hike. It might even go for a 750 basis point policy rate hike. In my opinion, that’s where we should be,” FCR Research Head Dimantha Mathew told Mirror Business.

Earlier, FCR had weighed in on a 100-300 basis point hike in policy rates.

Meanwhile, following the resignations of Central Bank Governor Ajith Nivard Cabraal, Treasury Secretary S.R. Attygalle and businessman Samantha Kumarasinghe, only President’s Counsel Sanjeeva Jayawardena and Dr. Ranee Jayamaha remain as the members of the Monetary Board. 

After the postponement of the third monetary policy review, which was scheduled for April 4, the next Monetary Policy meeting is likely to be held following the new year holidays, once the new members to the Monetary Board are appointed. 

The current Central Bank Senior Deputy Governor Mahinda Siriwardana is likely to be appointed as the Treasury Secretary. 

Meanwhile, the yields of Sri Lanka’s US dollar-denominated ISB maturing on July 25 hit 230 percent in the secondary market, as investors brace for the high possibility of a default.

The CB early this week held a virtual technical session with the International Monetary Fund (IMF) officials to prepare the necessary documentation to be submitted to the IMF Executive Board for a rescue programme.

However, with the resignation of Cabraal, the Central Bank officials said the next technical session would be scheduled following the appointment of the new governor.