CBSL has disappointed the market this time?

CBSL has disappointed the market this time?

No cut in SRR as market expected! It is unrealistic CBSL to be very optimistic about inflation outlook

http://www.lankabusinessonline.com/news/sri-lanka-lending-rates-to-ease-with-lower-state-borrowing:-central-bank/1044852152

But market wont dissapoint you.

Market reached 6,500 level even though some banks paid 20% (5years) for long term FDs and 12.5% - 13.5% for average FDs. When ever the int.rates go beyond 10% prudent investors, fund/equity managers move towards government securities such as Bonds, T-Bills.

Current interest rates have no effect on Market , is my opinion. Bringing down 1%- 2% in int.rates will have no effect at all to the market since long term deposits generates over 11% .

Prevailing economic conditions will not let CBSL to take a rabbit from its hat as controlling inflation will not be easy with higher energy prices.

Anyway the Market's RSI started to easing off. Normally it takes one and half months to complete the easing off process.

My advice is that not to be worry about interest rates as Market always create opportunities under any circumstances. Its a matter of entering the market at the correct point and do exit just before the others.

Cannot expect rate cuts all the time. I don't think there will be anymore for this year. But lending and deposit rates could ease as a result of the Earlier rate cuts.

Light of Hope wrote:Cannot expect rate cuts all the time. I don't think there will be anymore for this year.

I share your opinion: At the macro level, last month's rate cut by CBSL exceeded most analysts' expectations.

Light of Hope wrote:But lending and deposit rates could ease as a result of the Earlier rate cuts.

Yesterday, I was in discussions with a certain bank for a better FD interest rate (than what they had advertised on their website). Sometimes, they oblige. But yesterday, their response was: "The Treasury said they cannot improve the rate as a rate reduction is expected."

Antonym wrote:

Light of Hope wrote:Cannot expect rate cuts all the time. I don't think there will be anymore for this year.

I share your opinion: At the macro level, last month's rate cut by CBSL exceeded most analysts' expectations.

Light of Hope wrote:But lending and deposit rates could ease as a result of the Earlier rate cuts.

Yesterday, I was in discussions with a certain bank for a better FD interest rate (than what they had advertised on their website). Sometimes, they oblige. But yesterday, their response was: "The Treasury said they cannot improve the rate as a rate reduction is expected."

Yes, this is the general experience you face when inquire about better rates these days. I think maximum they can give is one year rate for three month FDs.

Getting back to the question, we can't expect rate cuts from CBSL every month. It's my view that CBSL will maintain the rates steady allowing market to adjust downwards as happened in last TB auction.

Last December CBSL did the first rate cut after couple of years and allowed the market to adjust. Then they issue a circular in March indicating the maximum FD rate. This make the way for the reduction of FD rates by 1.5-2.5%. I think CBSL will do the same in August and bring the one year rate to less than 14%. This can trigger the 2nd solid wave for 2013 in CSE.

hariesha wrote:Last December CBSL did the first rate cut after couple of years and allowed the market to adjust. Then they issue a circular in March indicating the maximum FD rate. This make the way for the reduction of FD rates by 1.5-2.5%. I think CBSL will do the same in August and bring the one year rate to less than 14%. This can trigger the 2nd solid wave for 2013 in CSE.

With the stock market having risen over the past month or so, the downside risks appear to be greater than the potential for a further increase. So, I decided against putting this month's savings into the stock market.

I was looking at FD interest rates... but couldn't find any good bank offering more than 12.75% for a one year deposit. I'm wondering whether CBSL has already instructed the banks to not offer more than 13%...

CB could not cut policy rate this month as inflation already started to increase due to energy price increase. They may try to reduce it next month though it is really difficult task under current conditions.

Antonym wrote:

hariesha wrote:Last December CBSL did the first rate cut after couple of years and allowed the market to adjust. Then they issue a circular in March indicating the maximum FD rate. This make the way for the reduction of FD rates by 1.5-2.5%. I think CBSL will do the same in August and bring the one year rate to less than 14%. This can trigger the 2nd solid wave for 2013 in CSE.

With the stock market having risen over the past month or so, the downside risks appear to be greater than the potential for a further increase. So, I decided against putting this month's savings into the stock market.

I was looking at FD interest rates... but couldn't find any good bank offering more than 12.75% for a one year deposit. I'm wondering whether CBSL has already instructed the banks to not offer more than 13%...

it is better to try at good finance companies such as VFIN, CDB, CFIN etc. Most of them offer over 15% for senior citizen fixed deposits. We just need to add father or mother as a joint holder.

another rate cut depends on achieving expected GDP growth. By next year we'll see banks offering single digit rates for FDs.

Do you expect it to drop a lot more ? What it your target guess?

Antonym wrote:
With the stock market having risen over the past month or so, the downside risks appear to be greater than the potential for a further increase. So, I decided against putting this month's savings into the stock market.

Antonym wrote:

hariesha wrote:Last December CBSL did the first rate cut after couple of years and allowed the market to adjust. Then they issue a circular in March indicating the maximum FD rate. This make the way for the reduction of FD rates by 1.5-2.5%. I think CBSL will do the same in August and bring the one year rate to less than 14%. This can trigger the 2nd solid wave for 2013 in CSE.

With the stock market having risen over the past month or so, the downside risks appear to be greater than the potential for a further increase. So, I decided against putting this month's savings into the stock market.

I was looking at FD interest rates... but couldn't find any good bank offering more than 12.75% for a one year deposit. I'm wondering whether CBSL has already instructed the banks to not offer more than 13%...

May we know why you are looking for a good bank for 1-yr FD?How about HDFC? As per the below link they offer 13.5%. Is HDFC a bad bank for 1-yr deposit?

http://www.hdfc.lk/pages/interest_rates/fixed_deposits.jsp

econ wrote:

Antonym wrote:

hariesha wrote:Last December CBSL did the first rate cut after couple of years and allowed the market to adjust. Then they issue a circular in March indicating the maximum FD rate. This make the way for the reduction of FD rates by 1.5-2.5%. I think CBSL will do the same in August and bring the one year rate to less than 14%. This can trigger the 2nd solid wave for 2013 in CSE.

With the stock market having risen over the past month or so, the downside risks appear to be greater than the potential for a further increase. So, I decided against putting this month's savings into the stock market.

I was looking at FD interest rates... but couldn't find any good bank offering more than 12.75% for a one year deposit. I'm wondering whether CBSL has already instructed the banks to not offer more than 13%...

it is better to try at good finance companies such as VFIN, CDB, CFIN etc. Most of them offer over 15% for senior citizen fixed deposits. We just need to add father or mother as a joint holder.

For senior citizen FDs, the applicants need to be senior citizens? However,the nominees need not to be senior citizens?

slstock wrote:Do you expect it to drop a lot more ? What it your target guess?

Antonym wrote:
With the stock market having risen over the past month or so, the downside risks appear to be greater than the potential for a further increase. So, I decided against putting this month's savings into the stock market.

I hope it doesn't drop a lot more, but I don't have a target in mind. However, at these elevated levels, I'm not putting any fresh money into stocks. Not pulling out funds either. Just reallocating my portfolio.
The relentless foreign buying is my only cause for hope and optimism.

funland wrote:

Antonym wrote:With the stock market having risen over the past month or so, the downside risks appear to be greater than the potential for a further increase. So, I decided against putting this month's savings into the stock market.

I was looking at FD interest rates... but couldn't find any good bank offering more than 12.75% for a one year deposit. I'm wondering whether CBSL has already instructed the banks to not offer more than 13%...

May we know why you are looking for a good bank for 1-yr FD?How about HDFC? As per the below link they offer 13.5%. Is HDFC a bad bank for 1-yr deposit?

http://www.hdfc.lk/pages/interest_rates/fixed_deposits.jsp

I normally bank with Commercial, but I check rates offered by HNB, Sampath and a couple of others.

I did not check with HDFC, which is also a good bank. If HDFC's rate is 13.5% for a 1-year FD (as the website says), that's a very generous rate because ComB, HNB & sampath are offering only 12%.

Antonym wrote:

funland wrote:

Antonym wrote:With the stock market having risen over the past month or so, the downside risks appear to be greater than the potential for a further increase. So, I decided against putting this month's savings into the stock market.

I was looking at FD interest rates... but couldn't find any good bank offering more than 12.75% for a one year deposit. I'm wondering whether CBSL has already instructed the banks to not offer more than 13%...

May we know why you are looking for a good bank for 1-yr FD?How about HDFC? As per the below link they offer 13.5%. Is HDFC a bad bank for 1-yr deposit?

http://www.hdfc.lk/pages/interest_rates/fixed_deposits.jsp

I normally bank with Commercial, but I check rates offered by HNB, Sampath and a couple of others.

I did not check with HDFC, which is also a good bank. If HDFC's rate is 13.5% for a 1-year FD (as the website says), that's a very generous rate because ComB, HNB & sampath are offering only 12%.

Try Union Bank. I was helping my father to put some money in FDs and Union bank had very impressive rates. Yes most of these reputed banks had lower rates than Union Bank. And DFCC had some good options too. But this was few weeks back.

This is the reason clearly for no changes
http://www.ft.lk/2013/05/03/imf-wants-soe-losses-cut-monetary-policy-on-hold/
As a Nation i feel this is a good move not the ASI gain as a individual. SL economy should stick to the rules for more 3 -5 years. Stock market shall not depend on the monetary policy. It shall depend on the performances of the companies which are listed.
Next thin is when you have extra money, if you have a brain and can think wisely then there is many paths to invest inside country better than the CSE. Even it will be very helpful to manage your risk.