The decision to cut rates was announced under Directive No. (8/2020), issued on April 27 and effective May 1.

The CBM  first cut rates by 0.5 pc on March 12.  A second 1pc cut was announced on March 24. The April 27 cut brings total rate cuts to 3pc within two months.

Starting from May 1, bank deposit rates in Myanmar will be reduced to a minimum of 5pc and lending rates will not exceed 10pc for collateralised loans, according to the CBM’s new directive.

However, rates for unsecured loans will remain at 14.5pc.

The reduction of interest rates is expected to provide some relief for borrowers and help support the economy, the CBM said.

 “As the Central Bank, we are making efforts to support the country’s economy by using monetary policy tools during this period. The main purpose of reduced interest rates is to enable more liquidity for businesses and we believe this will provide some support to businesses,’’ U Soe Min, Deputy Governor of the CBM, told The Myanmar Times today.

U Maung Maung Lay, vice chair of the Union of Myanmar Federation Chambers of Commerce and Industry, said that the lower interest rates can help businesses facing financial or operational problems as a result of COVID-19. “This is what businesses have always demanded,” he said.

U Zeyar Nyunt, CEO of Small and Medium Industrial Development Bank, welcomed the move, but said that his bank is preparing for depositors to withdraw larger volumes of cash. 

U Soe Min acknowledged that depositors would prefer higher interest rates but said that for the time being, the deposit volumes have not fallen substantially.

However, some existing borrowers said the new rates do not apply to existing loans and that very few banks are making new loans at this time. 

Source: https://www.mmtimes.com/news/central-bank-cuts-interest-rates-again.html