The Central Bank (BDL) has issued a circular mandating a further cut in interest rates that will be effective for six months.

BDL said in the circular that it has reduced the ceiling on foreign currency deposits blocked for more than one year to four percent.

The first reduction was carried out last December when the Central Bank cut interest rates on deposits by almost half without specifying any deposit term. The ceiling on foreign currency deposits was set at five percent.

According to the new decision, the banks must not exceed 7.5 percent interest rate on lira deposits blocked for more than one year. The previous ceiling on lira was 8.5 percent.

The rates apply to new or renewed deposits starting from Feb. 13, 2020.

Source: Central Bank

Cutting interest rates on deposits should be made in parallel or followed by a reduction in rates on loans. BDL said that the banks have to reduce the Beirut Reference Rate (BRR). The BRR is a reference rate for lending issued as a recommendation by the Association of Banks.

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