Central Bank of Sri Lanka

August 3, 2017

From October 2012 to April 2015, Sri Lanka’s central bank key lending and deposit rates had been cut in four moves by two percentage points. Half of that reduction was subsequently reversed in two 50-basis point hikes administered in February and July of last year. Since July 2017, the standing deposit facility rate has stayed at 7.25%, and its lending rate counterpart has been at 8.75%. The stance is appropriately “tight” according to a released statement after the most recent monetary policy review.

Excessive inflation is receding. “Inflation is expected to ease further towards the end of 2017 and stabilise thereafter due to the tight monetary policy stance maintained since the end of 2015 and the dissipation of the ‘one-off’ impact of the tax structure on inflation. However, monetary expansion continued to remain high in May as well as in June 2017.” The external sector’s outlook has improved.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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