The Central Bank of Myanmar is thinking about a plan to reduce interest rates and will implement it at a suitable time, said U Soe Min, Deputy Governor of the Central Bank of Myanmar, at the session of the Union Parliament on 10 February. 

The Deputy Governor yesterday submitted the report on the implementation of monetary policy from April to September, 2018 and the report on the monetary stability, at the Union Parliament. 

“On the one hand, Lowering the interest rates should take account of a plan to ensure better operations of businesses which will boost the production capacity and to ensure increased local demands by reducing loan expenditures. On the other hand, moderate high inflation rate should be taken into consideration. The central bank will carry out the reduction of interest rates at an appropriate time.”

The banks are allowed to freely offer banking services for the deposit and loan interest rates within the ranges fixed by the central bank. The central bank also allows the inter-bank lending at the mutually-agreed interest rates, he added. 

The government treasury bills and treasury bonds are sold through the auction system with the interest rates fixed by the market. Reducing interest rates would result in a drop in loan expenditures, thereby contributing to the investments, he continued. 

Normally, the interest policy is a driving force for the countries which see monetary market development. But it is found that Myanmar sees a less-developed monetary market and the monetary sector has no huge circulation of money which can promote the investments. That’s why, the change to the interest rates would not help support the country’s economy and may lead to an increase in non-qualified loans. As a result, it would result in high inflation and undermine economic stability. We need to take account of the above-mentioned facts.  

The CBM’s purchase and sale of foreign currency via auction mainly aims to keep the currency exchange rate stable, but for the profit making. High currency exchange is not linked to the purchase of foreign currency in the auction market. It is due to the situations at home and abroad, he said.