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Cabraal asks CBSL to walk the talk on interest rates

Tuesday, 5 September 2023 00:32 –      – 255

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Former CBSL Governor

Ajith Nivard Cabraal


 

  • Says CBSL must lower interest rates if they want banks to follow suit 
  • Notes people do not merely heed statements of CBSL but also observe its actions 
  • Claims growth is not possible with current interest rates and revamping is much-needed 

Former Governor Ajith Nivard Cabraal yesterday urged the Central Bank of Sri Lanka (CBSL) to follow its own advice on lowering interest rates.

Cabraal, joining the television news program, said it is ironic that the CBSL is requesting commercial banks to reduce interest rates when they themselves are paying higher interest rates every week.

“Just yesterday or two or three days ago, the Treasury bill rate went up to over 19%. When the Government and the CBSL on behalf the Government is paying 19% they are asking the banks to reduce their lending rates.

If you want the banks to reduce the rates then you also must ensure that the reduction is taking place from the Government side,” he said.

Cabraal said people do not merely heed to statements of the CBSL but also observe its actions. “If every week the Central Bank is increasing the interest rates, the banks will question as to what is going on and wonder how they can compete with gaining advances and deposits if the CBSL is paying 19% plus for deposits,” he noted.

“We have also got to see that there is a reflection of the ground situation on these rates. We can say goodbye to growth with these interest rates,” he added.

The former governor noted that economic growth has been negative every quarter since the increase of interest rates. “We must revamp these interest rates if we are to witness growth once more,” he opined.

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