Lending rates

If average annual inflation is in the 6% region, then interest rates should be between 2-3% higher, an economist said.

Ceylon Chamber of Commerce Chairman Dr. Anura Ekanayake was responding to a question in regard to administered lending rates at a function in Colombo on Tuesday.

He however said that the mismatch between lending rates and deposit rates may erode banks’ profitability. Ekanayake also said that banks’ should diversify their income earning portfolio which at present is heavily weighted towards interest income.