Lending rates to decline

At the Treasury bill auction held on 22.04.2009, interest rates recorded a sharp decline in the range of 71-100 basis points, due to the market taking a positive view on the deceleration of inflation rate.

With this reduction, primary market yield rates of Treasury bills have declined by 359 - 395 basis points during the year 2009.

The secondary market yield rates of Treasury bonds have also followed the same trend and declined by 203 - 290 basis points.

This downward movement in interest rate reflects the impact of relaxation of the monetary policy by the Central Bank in the context of declining trend in inflation and inflation expectations. In line with these developments, a reduction in the entire interest rate structure in the economy, including the lending rates of the commercial banks is expected.