Home
Register
Feb 25, 2016 (LBO) – Sri Lanka’s central bank governor hopes interest rates can be maintained at current levels, after a 50 basis point rate hike last week, but this will be determined by external factors, he said.
The island’s policy rates are at 6.5 percent and 8 percent, while 10-year treasury bond yields have increased to 11.75 percent.
“We will certainly try our best to keep interest rates at this level, and not let them escalate much further, but it is to a large extent determined by international trends,” Governor Arjuna Mahendran said, speaking to media on the state of the economy.
Emerging markets continue to experience foreign selling, according to him. First it was in anticipation of a US rate hike. Now its Middle Eastern sovereign funds liquidating positions to cover low oil revenues.
“If this selling continues for many more months to come, then we will have to consider further rate hikes ahead. So I won’t rule it out.”
The 50 basis point rate hike also took capital flows into account.
“This is a factor we have looked at in order to induce investors to keep their money in Sri Lanka. We have to offer higher returns. Raising interest rates ensures the currency stabilizes,” he added.
Last week’s rate hike was equally spurred by growth in bank lending running at 25 percent. Once growth runs beyond 15 percent, he is bound by law to write to the finance minister with an explanation.
“We had to resort to this unfortuate interest rate hike last week. The basic issue is that growth of bank lending is running at about 25 percent.”
“It is a good thing, and a sign of confidence, when banks are willing to lend and people are willing to borrow. But you don’t want it to get out of control. We don’t want a credit bubble that creates more problems than it solves.”
Sri Lanka’s economic growth is running above 5 percent and Mahendran suggested that economic growth would continue to be a priority. Monetary policy, in that sense, would support this.
The island’s policy rates are at 6.5 percent and 8 percent, while 10-year treasury bond yields have increased to 11.75 percent.
“We will certainly try our best to keep interest rates at this level, and not let them escalate much further, but it is to a large extent determined by international trends,” Governor Arjuna Mahendran said, speaking to media on the state of the economy.
Emerging markets continue to experience foreign selling, according to him. First it was in anticipation of a US rate hike. Now its Middle Eastern sovereign funds liquidating positions to cover low oil revenues.
“If this selling continues for many more months to come, then we will have to consider further rate hikes ahead. So I won’t rule it out.”
The 50 basis point rate hike also took capital flows into account.
“This is a factor we have looked at in order to induce investors to keep their money in Sri Lanka. We have to offer higher returns. Raising interest rates ensures the currency stabilizes,” he added.
Last week’s rate hike was equally spurred by growth in bank lending running at 25 percent. Once growth runs beyond 15 percent, he is bound by law to write to the finance minister with an explanation.
“We had to resort to this unfortuate interest rate hike last week. The basic issue is that growth of bank lending is running at about 25 percent.”
“It is a good thing, and a sign of confidence, when banks are willing to lend and people are willing to borrow. But you don’t want it to get out of control. We don’t want a credit bubble that creates more problems than it solves.”
Sri Lanka’s economic growth is running above 5 percent and Mahendran suggested that economic growth would continue to be a priority. Monetary policy, in that sense, would support this.
» CCS.N0000 ( Ceylon Cold Stores)
» Sri Lanka plans to allow tourists from August, no mandatory quarantine
» When Will It Be Safe To Invest In The Stock Market Again?
» Dividend Announcements
» MAINTENANCE NOTICE / නඩත්තු දැනුම්දීම
» ඩොලර් මිලියනයක මුදල් සම්මානයක් සහ “ෆීල්ඩ්ස් පදක්කම” පිළිගැනීම ප්රතික්ෂේප කළ ගණිතඥයා
» SEYB.N0000 (Seylan Bank PLC)
» Here's what blind prophet Baba Vanga predicted for 2016 and beyond: It's not good
» The Korean Way !
» In the Meantime Within Our Shores!
» What is Known as Dementia?
» SRI LANKA TELECOM PLC (SLTL.N0000)
» THE LANKA HOSPITALS CORPORATION PLC (LHCL.N0000)
» Equinox ( වසන්ත විෂුවය ) !
» COMB.N0000 (Commercial Bank of Ceylon PLC)
» REXP.N0000 (Richard Pieris Exports PLC)
» RICH.N0000 (Richard Pieris and Company PLC)
» Do You Have Computer Vision Syndrome?
» LAXAPANA BATTERIES PLC (LITE.N0000)
» What a Bank Run ?
» 104 Technical trading experiments by HUNTER
» GLAS.N0000 (Piramal Glass Ceylon PLC)
» Cboe Volatility Index
» AHPL.N0000
» TJL.N0000 (Tee Jey Lanka PLC.)
» CTBL.N0000 ( CEYLON TEA BROKERS PLC)
» COMMERCIAL DEVELOPMENT COMPANY PLC (COMD. N.0000))
» Bitcoin and Cryptocurrency
» CSD.N0000 (Seylan Developments PLC)
» PLC.N0000 (People's Leasing and Finance PLC)
» Bakery Products ?
» NTB.N0000 (Nations Trust Bank PLC)
» Going South
» When Seagulls Follow the Trawler
» Re-activating
» අපි තමයි හොඳටම කරේ !
» මේ අර් බුධය කිසිසේත්ම මා විසින් නිර්මාණය කල එකක් නොවේ
» SAMP.N0000 (Sampath Bank PLC)
» APLA.N0000 (ACL Plastics PLC)
» AVOID FALLING INTO ALLURING WEEKEND FAMILY PACKAGES.
» Banks, Finance & Insurance Sector Chart
» VPEL.N0000 (Vallibel Power Erathna PLC)
» DEADLY COCKTAIL OF ISLAND MENTALITY AND PARANOID PERSONALITY DISORDER MIX.
» WATA - Watawala
» KFP.N0000(Keels Food Products PLC)
» Capital Trust Broker in difficulty?
» IS PIRATING INTELLECTUAL PROPERTY A BOON OR BANE?
» What Industry Would You Choose to Focus?
» Should I Stick Around, or Should I Follow Others' Lead?