The Central Bank of Myanmar has said that it plans to soon allow freely floating interest rates, amid concerns that current restrictions with a ceiling of 13 percent and a floor of 10 percent for lending are too strong.
The bank’s Deputy Governor, U Set Aung, said that the change will come as the first batch of international banks enter the country and that the liberalisation will take place first on US Dollar loans, followed by Myanmar kyat loans. U Set Aung said that, before allowing free flowing interest rates on kyat loans, Myanmar must first have a functioning Treasury bill market and a strong interbank lending market, something the Central Bank has been actively encouraging. The announcement has been met with support from bankers, who say that less restrictions on interest rates would encourage credit growth.
