Central Bank decides to reduce SRR & keep policy rates unchanged

Feb 22, 2019 (LBO) – The Monetary Board of the Central Bank, at its meeting held on 21 February 2019, has decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of commercial banks by 1.00 percentage point to 5.00 percent with effect from 01 March 2019.

The Board also decided to keep the policy interest rates of the Central Bank unchanged at their current levels, and accordingly, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank will remain at 8.00 per cent and 9.00 per cent, respectively.

The Board said it arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as in the global economy, with the broad aim of stabilising inflation at mid single digit levels in the medium term to enable the economy to reach its potential.

“Given the current and expected conditions in the domestic economy and financial market, the Monetary Board observed that the continuation of the current neutral monetary policy stance is appropriate,” the Central Bank said.

“However, the Board was of the view that some policy intervention by the Central Bank to address the large and persistent liquidity deficit in the domestic money market is warranted.”