Central Bank closely monitoring global, domestic developments vis-à-vis COVID-19

The Central Bank (CB) is closely monitoring global and domestic market developments, and further measures will be taken as necessary to mitigate the economic impact of the COVID-19 pandemic, according to CB Governor Prof. W.D. Lakshman,
Issuing a statement on Tuesday, he referred to Monday’s decision of the Monetary Board of the CB where policy interest rates were reduced by 25 basis points and the Statutory Reserve Ratio by 1.00 percentage point.
He said, while an economic turnaround was envisaged this year, it is increasingly evident that domestic economic activity during 2020 would continue to be affected by the spread of the pandemic. 
“The action taken by the Monetary Board on Monday will complement the measures that are already in place to revive economic activity, by inducing a further reduction in market lending rates and boosting liquidity conditions in the domestic money market,” he said. 
The CB has requested all financial institutions led by licensed commercial banks to pass to the market the full benefit of the cumulative reduction of 75 basis points in policy interest rates thus far during the year as well as the reduced cost of funds through the reduction in SRR without any delay, to ensure that those who are in need of urgent support receive the required timely assistance. The statement said that it is good for financial institutions to keep in mind that the revival of business activity in the country is to their “own self-interest”. 
“We have also requested financial institutions to refrain from engaging in speculative activity which could lead to panic in the financial market. We are working closely with the government to ensure coordinated fiscal and monetary policy responses to mitigate the economic impact of the pandemic,” he said. 
As was done on Monday, the well tested business continuity arrangements of the CB will be triggered as and when required to prevent any disruption to cash and electronic transactions of the general public and ensure the timely settlement of liabilities of the government and the regulator. (BS)