Central Bank of Sri Lanka (CBSL) Governor Nandalal Weerasinghe said he would like to see private sector interest rates come down further and at a faster pace.

He said that the domestic debt restructuring is the most important focus for the debt-laden country in the near-term.

Speaking at a LSEG FX Community Event yesterday (7), the Governor said that monetary policy transmission to the real economy in Sri Lanka is still incomplete.

According to Reuters, he said that he would like to see private sector interest rates come down further. “We would firstly like to see yields drop in line with policy rates and, from there, decline further. We are waiting to see this reaction from markets,” he said.

In the last two months Sri Lanka has slashed policy rates by 450 basis points, signalling a focus on growth after the crisis-hit economy contracted by 7.8% last year.

Sri Lanka is on track to post a stronger performance this year than the 3% contraction projected by the IMF, Dr. Weerasinghe said.

“Sri Lanka has managed to do better than expected before and we are hopeful that Sri Lanka will once again perform better than the projections,” he said.

Over the past five months Sri Lanka’s economy has stabilised with inflation dwindling to 6.3% in July, from a high of 69% last September, and on track to hit the central bank’s target band of 4%-6%.