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The Central Bank of Barbados announces a modification to its Monetary Policy
With effect from December 29, 2008 the discount rate payable by commercial banks on temporary advances from the Central Bank will be reduced from 12% to 10%.
The discount rate has been at 12% since March 2006. However, starting in November 2007, the Bank has reduced the minimum deposit rate by 1¼ percentage points in an effort to lower the operational costs of business firms. This reduction in rates brings the discount rate more in line with the new existing deposit rate and by lowering the rate it helps to lower the cost of borrowing from any commercial banks, which might encounter liquidity difficulties in the future. No commercial banks have been accessing the discounts window in 2008. It is hoped that the decrease in the discount rate will also have a moderating effect on loan rates.
December 18, 2008