The Central Bank of Myanmar has no plan to reduce the interest rate and will lower the interest rate only when the inflation rate is stable, said its deputy governor, Soe Thein, at a press conference on Tuesday.
“The CBM always monitors the inflation rate. We calculate the interest rate based on many data such as the growth rate, inflation rate, work implementation and revolving money in businesses. The calculation of interest rate is not based on a single factor.
“We think about other factors such as lenders, borrowers, possible impacts, and so on. We have a plan to decrease the interest rate at the suitable time.”
Currently, the monthly inflation rate stands at around 4.5 per cent while the yearly inflation rate has declined to five per cent. The CBM is working to keep the inflation rate at around 5.5 per cent.
“The interest rate has been on the decline eight months ago. We will obtain something if we can continue to maintain it for six to 10 months. No country in the globe decreases the interest rate from eight to five per cent,” he added.
The CBM needs to take the saving deposits of citizens into consideration when it plans to change the interest rate. Banks may face a decline in savings deposits when the deposit interest rate is low.
“The majority of money savers who have opened savings accounts are middle-class and lower middle-class people. Wealthy persons who deposit money at banks are in minority but their savings amounts are huge.
“People get salaries and save their money at banks. They have to rely on the interest rate. There is no big gap for the real interest rate. They may withdraw their money from banks when lowering interest rates may have impacts on them. This is a major point we need to think about,” he added.