Central Bank Governor yesterday (8) defended imposing lending rate caps insisting that it would give a strong boost to the economy by March once the election cycle is over.

“Nominal growth at the moment is 8%, so that is 5% inflation and 3% growth, But if the average weighted lending rate is higher than that, it is not feasible for businesses. Which is why we have imposed these lending rate caps,” Central Bank Governor Dr. Indrajit Coomaraswamy said whilst speaking at the inauguration of the Association of Professional Bankers’ 31st Anniversary Convention titled ‘Challenge of Disruptive Change – Together Towards Tomorrow’.

“Now it's being done gradually. At the prime lending rate down to 9.5% by end of December. The average rated lending rate down to 12.5% by the end of March. The idea is to give time for Banks  to re-price their loans and the base line we are taking is the date on which the deposit rate cap will place on the 30th of April. I know there are lots of complaints of what the Central Bank is doing.  But we have done this at a temporary means of getting the economy going. So by March hopefully, the political cycle, the election cycle is over, will have a lending rate structure which would give a strong boost to the economy,” he added.