The Central Bank has decided to reduce the policy interest rates aiming to boost economic growth, the Central Bank said in its monetary policy review Friday.
Accordingly, the rates have been reduced by 50 basis points with immediate effect and the new Repurchase rate and the Reverse Repurchase rate of the Central Bank will be 7.00 percent and 9.00 percent, respectively.
In addition, the reserve maintenance period of commercial banks will also be increased to two weeks from one week with effect from 1st June 2013 in order to offer greater flexibility to commercial banks in managing their liquidity, while maintaining the Statutory Reserve Ratio at the current level of 8 percent, the Central Bank said in its report released yesterday.
The Central Bank said since the inflation and inflationary pressures are low and do not pose any immediate risk to the economy and considering the current macroeconomic developments, the Monetary Board was of the view that a downward adjustment to the policy rates is appropriate in order to stimulate domestic economic activity.
The Central Bank said although the tight monetary policies the Bank and the government implemented in early last year are producing the desired results, the Bank is concerned that the policies are somewhat retarding the economic growth and of the view that there is now a need to stimulate the domestic economy.