No Change Made in Sri Lankan Monetary Policy Stance

February 16, 2018

The Central Bank of Sri Lanka’s standing deposit facility rate and standing lending facility rate have been at 7.25% and 8.75% since an increase of 50 basis points in July 2016. That was the second such reduction of 2016 and along with an earlier move in February reversed two percentage points of easing engineered between October 2012 and April 2015. Current central bank levels are the highest in over four years. Extreme weather in 2016-7 forced up inflation, but on-year total and core CPI fell sharply last month and, according to a released statement from the Monetary Board yesterday, are expected to settle into the “desired mid-single digits” this year. The economy has been operating below its full potential but will likely “benefit from the expected
boost in external demand and foreign direct investment inflows” and grow somewhat faster this year. All in all, officials concluded that the current policy stance remains “appropriate.”

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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