Central Bank reduces policy interest rates

Interest rates have been reduced by 50 basis points, the Central Bank (CB) said on Friday.

The decision was made by the CB’s Monetary Board at its meeting held on Thursday. It was decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points to 7 per cent and 8 per cent, respectively. 

“The Board arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy, with the aim of further supporting the revival of economic activity in the context of low inflation prevailing at present and the medium term inflation outlook, which is well anchored in the desired 4-6 per cent range,” the CB said in a statement.

Policy interest rates are reduced to encourage more economic activity based on commercial borrowings while any increase is meant to prevent any overheating in the economy.