Sri Lanka Central Bank Keeps Rate Unchanged
Sri Lanka central bank left its key interest rates unchanged for the second straight time on Thursday amid severe economic downturn and record high inflation.
The Monetary Board of the Central Bank of Sri Lanka kept its standing lending facility rate at 15.50 percent and the standing deposit facility rate at 14.50 percent.
The bank had last raised its rates by 100 basis points in July. Earlier in April, the bank had hiked the rates by a massive 700 basis points.
The board viewed that the recently introduced tight fiscal policy measures would help curtail any further build-up of demand pressures in the economy, complementing the effects of tight monetary policy already in place.
Policymakers said the current monetary conditions remain sufficiently tight to achieve the disinflation path in the period ahead.
The bank said it stands ready to take measures swiftly and proactively, as appropriate.
Despite a rise in headline inflation in September, the bank expects inflation to follow a disinflation path in the period ahead. The board forecasts inflation to ease to the targeted level of 4-6 percent over the medium term.
The economy is projected to shrink in the second half of the year as well after a 4.8 percent fall in the first half. However, a recovery in economic activity is expected in 2023 with the envisaged improvements in the supply-side, along with the timely implementation of the required reforms.
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