Interest income dependents seek higher interest rate | Sunday Observer

Interest income dependents seek higher interest rate

29 November, 2020

Interest income dependents who account for a sizeable section of the country are not pleased with the recent  monetary policy stance of the Central Bank which decided to maintain the standing deposit facility rate at  4.50 percent when the cost of goods and health care are yet high in the country.

A senior citizen who wished to remain anonymous said the only income he had was the return from the little savings he had.

Since interest rates have come down sharply this year his earning has declined sharply  and asa results finds it difficult to make ends meet.

“We would be happy if the authorities could consider our plight and increase the interest rates on deposits by a certain percentage above the  inflation rate to keep nose above water,” he said.

The Central Bank at its last policy review for the year decided to maintain the  Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR)  at their current levels of 4.50 per cent and 5.50 per cent.

The Board arrived at the decision taking into account the macroeconomic conditions and expected developments on the domestic and global fronts. The Board, having noted the reduction in overall market lending rates so far during the year, stressed the need for a continued downward adjustment in lending rates to boost economic growth in the absence of demand driven inflationary pressures, particularly considering the significant levels of excess liquidity prevailing in the domestic money market.

“The Monetary Board decided to maintain the interest rates at the current levels to support the revival of the economy,” Central Bank Governor Prof. W.D. Lakshman said.

Headline inflation remained within the targeted range of 4-6 per cent and core inflation remaining low, reflecting subdued underlying demand pressures. With price declines observed in certain food items, near term inflation is expected to remain low. However, inflation is expected to gradually gather pace over the next two years with the expected improvement in aggregate demand, stimulated by accommodative monetary and fiscal policies and the normalisation of global oil prices. 

The Board decided to introduce maximum interest rates on mortgage backed housing loans for salaried workers, while lending targets for selected sectors of the economy will be introduced in the near future.