The weekly Average Weighted Prime Lending Rate (AWPLR) of Sri Lanka has come under 11% for the first time in more than a year, and is showing signs of decreasing further, as expected and desired by the Government and Central Bank. The prime lending rate came down to 10.97% for the week ending 12 July, while last week, it went even lower, to 10.84%. The last time the weekly AWPLR was below 11% was in March last year, when it was recorded at 10.99% on 23 March 2018, after which it was on its way up, and ever since has been well above the 11% mark. The Prime Lending Rate is the interest rate charged by Sri Lanka's banks from their largest, most secure, and most creditworthy customers on short-term loans. This rate is used as a guide for computing interest rates for other borrowers. The weekly AWPLR is the average prime lending rate among banks in a particular week. A lower rate means more access to finance for businesses and entrepreneurs, enabling greater economic activity and growth. A week into the Easter Sunday incident, the AWPLR went up to 12.24% from 11.99%, while during the political turmoil which erupted on 26 October 2018 and lasted 51 days, the least AWPLR was 11.81% while the highest was 12.28%. However, since that first post-Easter week, the weekly AWPLR had been coming down gradually, although there was a minor uptick during the last two weeks of June. The rate has reduced by 127 basis points from 12.24% as at 26 April 2019 to 10.97% as at 12 July 2019. During a recent press conference, Prime Minister Ranil Wickremesinghe noted that the prime lending rate would go down from 12% to 10% by the end of this month. The Central Bank, issuing a statement last week, said that it expects lending rates of banks and Non-Bank Financial Institutions (NBFIs) to reduce further in the immediate future, allowing borrowers, particularly SMEs, to obtain credit facilities at reduced interest rates from banks and NBFIs. It also sounded a warning to banks that it will closely monitor the behaviour of bank interest rates and take further measures as appropriate in future to support economic growth given well-contained inflationary pressures. The Central Bank requested licensed banks and NBFIs to reduce interest rates on deposits with effect from 29 April 2019. This measure was taken to accelerate monetary policy transmission through the financial sector, enabling licensed banks to reduce their interest rates on lending products in general, and to SMEs in particular, thereby enhancing credit flows to the real economy. On 30 May, the Monetary Board of the Central Bank of Sri Lanka reduced the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points to 7.50% and 8.50%, respectively, due to developments in the domestic economy and the financial market as well as the global economy. In its last meeting held on 11 July, the Monetary Board decided to maintain the policy rates at their current levels to allow some space to witness the impact of the previous policy rate cut.