Sri Lankan Central Bank Keeps Policy Rates Unchanged to Control Inflation

The Central Bank of Sri Lanka (CBSL) has decided to maintain the Standing Deposit Facility Rate and the Standing Lending Facility Rate at their current levels of 9 per cent and 10 per cent, respectively, to control inflation at the targeted level of 5 per cent over the medium term, while enabling the economy to reach its potential, its statement said on Tuesday.

The decision was taken on Monday following a comprehensive assessment of domestic and international macroeconomic developments in order, the central bank said in a statement.

The board took note of the effects of the recent developments in taxation and supply-side factors that are likely to pose upside pressures on inflation in the near term.

However, the board viewed that the impact of these developments would not materially change the medium term inflation outlook, according to the central bank, it said.

The Sri Lankan economy recorded an expansion in the third quarter of 2023, following six consecutive quarters of economic contraction, said the central bank.

Sri Lanka increased its interest rates significantly in 2022 to deal with rising inflation. The rates have been reduced several times in 2023.