According to Dr. Nandalal Weerasinghe, governor of the Central Bank of Sri Lanka, the transmission of monetary policy to the country’s real economy is still not complete.
Dr. Weerasinghe stated that he would prefer to see private sector interest rates decline more and more quickly when speaking at an event yesterday (August 7).
Dr. Weerasinghe claimed that the restructuring of domestic debt has received more attention and that the potential exists to further ease policy rates in light of the declining inflation rate.
In order to maintain the inflation and money pressures that contributed to the economic crisis, measures were taken to raise interest rates to all-time highs. Policy rates have decreased by around 450 basis points over the past two months, he continued.
