The Monetary Board of the Central Bank has decided to further reduce its key policy interest rates by 25 basis points (bps) in a bid to cushion the impact of COVID-19 on the island nation’s economy.
The Monetary Board took this decision in an emergency meeting convened today its second such meeting since March 16, when the policy rates were cut by 25 basis points. So far this year, policy rates have been slashed by 100 basis points. The next and the third monetary policy meeting for the year was due on April 09 but the Central Bank said there would not be any policy announcement on the 09th.
“However, 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 Central Bank said.
Since March 16 the Central Bank announced a slew of measures to support the economy by way of lower borrowing rates and liquidity support to prevent businesses and the individuals from defaulting their loans. After yesterday’s decision, the Standing Deposit Facility Rate or the rate at which the Central Bank absorbs excess liquidity from the banking system was brought to 6.00 percent while the Standing Lending Facility Rate or the rate at which the Central Bank infuses liquidity into the banking system was reduced to 7.00 percent.
“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 Central Bank added.