Central bank unexpectedly cut key policy rates on Friday

Central bank unexpectedly cut key policy rates on Friday

Central bank unexpectedly cut key policy rates on Friday

Written by Staff Writer

03 Apr, 2020 | 8:07 pm

COLOMBO (News1st): The Central bank on Friday unexpectedly reduced the key policy rates further 25 basis points to enable the domestic financial market to provide further relief to businesses and individuals affected by the outbreak of the COVID-19 pandemic and restrictions placed to contain its spread within the country.

Friday’s rate cut is the third cut for the year and the bank has reduced the rates by 100 basis points so far this year.
The Central Bank advanced its Monetary Board meeting to Friday and decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 25basis points to 6.00 percent and 7.00 percent, respectively, effective from the close of business on 03 April 2020.

“This decision will complement the measures taken thus far to ease market conditions, and enable the domestic financial market to provide further relief to businesses and individuals affected by the outbreak of the COVID-19 pandemic and restrictions placed to contain its spread within the country,” the bank said in a statement.

The Bank also said the Monetary Board may review the monetary policy stance of the Central Bank and make necessary changes as and when required in consideration of economic and market developments.

The Monetary Board in March at an urgent meeting reduce the SDFR and the SLFR by 25 basis points with effect from 17 March 2020 and reduced the Statutory Reserve Ratio (SRR) on all rupee deposit liabilities of licensed commercial banks (LCBs) by 1.00 percentage point to 4.00 percent considering the urgent need to support economic activity with the rapid global spread of the COVID-19 pandemic and its possible further spread in Sri Lanka.

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