President says bank interest rates will drop as inflation lowers

By Sujeewa Thathsara

Sri Lanka will consider reducing bank interest rates as the inflation keeps on dropping, President Ranil Wickremesinghe has told small and medium scale rice mill owners, the President’s Media Division (PMD) said on Friday.

The rice mill owners told the President that they had to draw bank loans at 28% interest.The President said he understood the issues faced by Sri Lankan businesses.

The International Monetary Fund (IMF) would provide a 2.9 billion US dollar financial facility by March, the President said, adding that it would allow Sri Lanka to secure funds from other sources as well.Sri Lanka increased tax rates in early 2022 in a bid to reduce inflation.

Since then the country’s Central Bank has maintained its Standing Deposit Facility Rate and Standing Lending Facility Rate at 14.50 percent and 15.50 percent, respectively.

The Monetary Board noted that sticking to a tight monetary policy stance was necessary to contain any demand-driven inflationary pressures on the economy.This will help the Southeast Asian country lower inflation towards the targeted range of 4-6 percent, over the medium term, according to the bank.Meanwhile, inflation has dropped to 54.2 percent, in January 2023, from a peak of 73.7 percent, recorded in September 2022.