CB holds rates; limits access to deposit facility
September 23, 2014 08:44 am
Sri Lanka’s central bank on Tuesday kept key policy rates steady, but limited commercial banks’ access to its repurchase or standing deposit facility in order to boost lending in a lower inflationary environment.
The central bank kept the reverse repurchase or standing lending facility rate at 8.00 percent as expected, while limited the access of commercial banks’ standing deposit facility (SDF) to three times a calendar month at the current 6.50 percent.
“...any deposits at the SDF window exceeding three times by an OMO (open market operation) participant to be accepted at a reduced interest rate of 5.00 per cent per annum,” the central bank said in a statement.
The central bank said the decision was taken after noting that commercial banks were depositing excess liquidity with the central bank at infrequent intervals amid moderate private sector credit growth despite lower inflation and interest rates.
A Reuters poll of 15 analysts had expected the central bank to keep the policy rates unchanged, Reuters reports.
The central bank kept the reverse repurchase or standing lending facility rate at 8.00 percent as expected, while limited the access of commercial banks’ standing deposit facility (SDF) to three times a calendar month at the current 6.50 percent.
“...any deposits at the SDF window exceeding three times by an OMO (open market operation) participant to be accepted at a reduced interest rate of 5.00 per cent per annum,” the central bank said in a statement.
The central bank said the decision was taken after noting that commercial banks were depositing excess liquidity with the central bank at infrequent intervals amid moderate private sector credit growth despite lower inflation and interest rates.
A Reuters poll of 15 analysts had expected the central bank to keep the policy rates unchanged, Reuters reports.
