Fri, 29 Mar 2024 Today's Paper

Prime lending rate touches fresh low despite bond yield hike concerns

15 March 2021 09:38 am - 0     - {{hitsCtrl.values.hits}}

A A A

  • AWPLR hits new low of 5.54% breaking previous all-time low of 5.59%
  • AWPLR has come down 27 bps year-to-date and by 420bps in 2020
  • CB has maintained commitment to dovish policy amid benign inflation trajectory 

The prime lending rate, which indicates where the broader market lending rates are heading, touched a fresh low last week, a week after the Monetary Board doubled down their commitment for lower rates. 


The Average Weighted Prime Lending Rate (AWPLR), a benchmark rate used for pricing short tenor loans to prime customers of banks, fell by 13 basis points through last week to end at 5.54 percent last Friday from the week earlier. 


This breaks the previous all-time low of 5.59 percent on February 5, while the excess liquidity in the money market rose from Rs.116.49 billion to Rs.181.38 billion between the periods. 
Last week’s fall in the benchmark lending rate brings the year-to-date decline in the AWPLR to 27 basis points (bps), and the rate fell by as much as 420 bps since the beginning of 2020 when the current declining interest rates cycle began. 


There were concerns raised by several parties during the last couple of weeks over the ability to sustain the lower interest rates as Treasury bills and bond yields saw some uptick in recent weeks, stoking concerns about inflation making a comeback.  


First Capital Research recently advised investors to hold on to their longer-term bonds, as they were uncertain about the yields trajectory, after they forecasted interest rates to rise from the second half of the year with potential increase in key policy rates in the third and the fourth quarters. 


But the Central Bank maintained commitment to its dovish stance while illustrating its medium term inflation trajectory, which remains benign.


The Monetary Board doesn’t take decisions based on how the bond market yields behave, but takes a broader and a medium term view of the prices and economic growth, as its rate decisions should not hamper growth, nor overheat the economy. 


Sri Lanka has maintained interest rates at their historical lowest levels for the longest period ever, giving a boost to consumer and business spending, as seen from the recent corporate results which hit an all-time high even amid a pandemic. 


Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

  Comments - 0

Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment





Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

VAT increase: SOUNDs death knell for publishers, readers

Though the Government imposed VAT (Value Added Tax) on vegetables and other e

How female change-makers are driving Sri Lanka’s energy saving platform

Saving energy has become more of a responsibility than a habit in today’s c

A dull Ramadan awaits Muslims amidst the Soaring Cost of Living

In the coming days, Muslims across the world will welcome the Holy Month of R

New wildlife underpass to curtail HEC

As of February 2024, Sri Lanka lost another 38 elephants as a result of the H