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CB
eases monetary policy stance
Says
reduction in penal rate on reverse repo deals will lead
to further cut in market interest rates
In
view of declining inflation, the Central Bank on Monday
eased its monetary policy stance expressing hope that
it would lead to a downward trend in market interest
rates.
The revision in its stance was following the Monetary
Board deciding to reduce the penal rate of interest
charged on reverse repurchase transactions with the
Central Bank by 200 basis points to 17 per cent with
immediate effect. The penal rate now serves as a ceiling
on overnight interest rates and as a benchmark rate
for other market rates.
“The Central Bank has decided to ease its monetary
policy stance in view of the declining inflation and
inflation expectations as well as the gradual decrease
in market interest rates including yields on government
securities. This reduction in the penal rate will lead
to a further reduction in market rates of interest,”
the regulator said in a statement following the January
monetary policy review.
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