Interest rates across the board seen falling -- CB

A reduction in the entire interest rate structure in the economy, including the lending rates of the commercial banks, is expected following a fall in interest rates of treasury bills, the Central Bank said.

Interest rates recorded a sharp decline in the range of 71-100 basis points at the Treasury bill auction held on April 22 due to the market taking a positive view on the deceleration of inflation rate, the Bank said. With this reduction, primary market yield rates of treasury bills have declined by 359 – 395 basis points during the year 2009.

The secondary market yield rates of Treasury bonds have also followed the same trend and declined by 203 - 290 basis points. This downward movement in interest rate reflects the impact of relaxation of the monetary policy by the Central Bank in the context of declining trend in inflation and inflation expectations, the Bank statement said.