The Central Bank of Sri Lanka (CBSL) has announced an expectation for a continued decrease in market lending interest rates in the upcoming period.

This anticipation follows the ongoing adjustment of market interest rates in line with a relaxed monetary policy and administrative measures aimed at reducing overall lending rates, the CBSL said in its monetary policy review.

The Monetary Policy Board of the Central Bank believes that there is still room for market interest rates, specifically lending interest rates and yields on government securities, to decline further. This outlook aligns with the recent reduction in policy interest rates.

The board highlighted the sustained decline in yields on government securities, supported by decreasing risk premia. It anticipates that this trend will extend to market lending interest rates, contributing to a more favorable economic environment.