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General
Press Releases
Press
Release December
1, 2006
The
Central Bank of Barbados announces change to its Monetary Policy
The
Central Bank of Barbados announces a modification to its
monetary policy.
Effective
December 15, 2006, the minimum rate of interest payable on
deposits will be increased from 4.75% to 5.25%.
Available
data show that retained imports fell marginally (by 1.5%) during
the first nine months of 2006.
However, their absolute value was still high, given the
large increase which was recorded during the corresponding
period of 2005. At
the same time, bank credit to the private sector was still
robust, expanding by 8.3% as a result of the strong demand for
residential mortgages and additional borrowing by the
distributive sector and private financial institutions.
Accordingly, the net international reserves (NIR) fell by
$103.7 million between January and September this year.
The
change in the minimum deposit rate is intended to encourage
savings and through the impact on lending, slow the rate of
growth in credit to the private sector, and by so doing, reduce
imports and improve the balance of payments.
Moreover, the minimum deposit rate of interest will now
be the same as the Fed Funds rate (which is the benchmark for
deposit rates in the United States) thereby helping to remove
the incentive for outward flows in search of higher return.
December
1, 2006
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