Treasury Secy. says interest rates to remain steady

Tuesday, 11 March 2014 02:58 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka’s key interest rates will remain steady for the next two to three months, Treasury Secretary P.B. Jayasundera said on Monday,

as the country’s banking sector is facing poor private sector credit growth des-pite multi-year low monetary policy rates. “No adjustment will take place in the next two to three months,” Jayasundera told Reuters when asked if the monetary authorities are considering any further downward adjustments to the interest rates to boost faltering credit and economic growth. The Central Bank maintained a dovish monetary policy since December 2012. It cut both the repurchase rate and the reverse repurchase rate by 125 basis points (bps) each in the 11 months between December 2012 and October 2013 before. In January, the Central Bank reduced reverse repurchase rate by a further 50 bps. Both key rates are at their multi-year low.

Secondary market Treasury yields dip in thin trade

In secondary bond markets, yields dipped marginally yesterday in thin trade mainly on the liquid two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) to daily lows of 8.82% and 8.90% respectively in comparison to its previous week’s closing levels of 8.85/88 and 8.93/97 respectively. Wealth Trust Securities said in addition the maturities of 1 April 2016, 15 July 2017 and 15 January 2019 were also seen changing hands marginally lower within the range of 7.35/40, 8.30/35 and 9.00/05 respectively. The 364 day bill was quoted at levels of 7.02/07 in secondary markets as well. Meanwhile in money markets, overnight call money and repo rates continued to remain steady to average 6.89% and 6.34% respectively despite excess liquidity decreasing to Rs. 17.06 billion yesterday. The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 10 b on a four day basis at a weighted average of 6.64% by way of a repo auction while a further amount of Rs. 7.06 b was deposited at CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50%.