The Central Bank of Barbados Issues a Change in its Interest Rate Policy

The Central Bank of Barbados just announced a new approach to influencing interest rates in the economy.

Effective April 18, 2013, the Bank will from time to time intervene actively in the Treasury Bill market to influence the average rate at which the bills are sold. The coupon rates to be offered on all longer dated securities (Treasury Notes and Debentures) will be priced at an appropriate premium over the Treasury bill rate.

The Bank will publish a quarterly notional yield curve on its website www.centralbank.org.bb to provide guidance to the market for issues of longer dated securities. Additionally, a bulletin of selected market statistics will be posted on the site to provide timely market intelligence. With the introduction of this policy, the minimum deposit rate will no longer be used for interest rate guidance.

(FILE IMAGE) The Bank will continue to stipulate a ‘minimum savings rate’ to be applied to the single purpose savings accounts of private individuals and non-profit organisations. This rate is designed to partially insulate small savers against the erosion of the real value of their funds as a result of inflation.

(FILE IMAGE) The Bank will continue to stipulate a ‘minimum savings rate’ to be applied to the single purpose savings accounts of private individuals and non-profit organisations. This rate is designed to partially insulate small savers against the erosion of the real value of their funds as a result of inflation.

The minimum savings rate will remain at 2.5 percent. Financial institutions will remain free to set all rates, other than the minimum savings rate.

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