CB urges banks to bring down interest rates or face consequences

• The average weighted lending rate has come down from 29 percent to about 20 percent 
• CBSL yesterday reduced policy interest rates by 2 percent

The Central Bank yesterday said action will be taken against banks if they do not reduce interest rates in line with the reduction in policy interest rates.  

The Central Bank yesterday reduced policy interest rates by 2 percent after reducing them by 2.5 percent in June. Now the policy interest rates remain at 11 percent (deposit) and 12 percent (lending).   

The Central Bank Governor Dr. Nandalal Weerasinghe said the average weighted lending rate has come down from 29 percent to about 20 percent in response to the June policy rate cut and other positive developments in the economy.   

But with yesterday’s relaxation in the monetary policy, market interest rates should further come down, he pointed out.  

Dr. Weerasinghe said banks have been given time to adjust the interest rates on their own to reflect the policy interest rates. If not, the Central Bank will have to take administrative measures to bring down market interest rates, he averred.