CBSL was of the view that the maintenance of the prevailing tight monetary policy stance is imperative to ensure that monetary conditions remain sufficiently tight to rein in inflationary pressures.
Early signs of a gradual easing of excessive market interest rates have been observed recently in response to the administrative measures adopted by the CBSL. These actions led to a notable moderation in the yields on government securities recently.
These developments are expected to pave the way for an easing of excessive market interest rates in the period ahead. Monetary Board is of the view that there is sufficient space for excessive market interest rates, including lending interest rates to Small and Medium Sized Enterprises (SMEs), to adjust downwards considering the recent improvements in domestic money market conditions and sentiments along with the moderation in the yields on government securities.