The Monetary Board has decided to reduce the penal rate of interest charged on reverse repurchase transactions with the Central Bank (CB) by 200 basis points to 17 %, the CB said in a press release.
The penal rate now serves as a ceiling on overnight interest rates and as a benchmark rate for other market rates.
The CB has decided to ease its monetary policy stance in view of the declining inflation and inflation expectations as well as the gradual decrease in market interest rates including yields on government securities. This reduction in the penal rate will lead to a further reduction in market rates of interest, it said.
“The significant decline in inflation over the past six months and the favourable outlook for inflation during 2009 has enabled the Central Bank to facilitate a reduction in market interest rates,” the release said.
The CB said it expects inflation to remain at modest levels thereafter, guided by its policies aimed at monetary stability. If the declining trend in price increases continues as expected, the CB said it will consider further easing its monetary policy stance, enabling financial intermediaries to reduce the rates at which they lend to borrowers further.. |
E-mail