Central Bank of Sri Lanka’s Interest Rates Cut by 50 Basis Points in Mostly Unexpected Move

August 23, 2019

Friday brought word of another central bank rate cut. This time it involved the Central Bank of Sri Lanka. The rate cut size was 50 basis points each to the key deposit rate (now 7.0%) and lending rate (now 8.0%). The cut follows a similarly sized reduction engineered in May, which together almost offset a duo of rate hikes in July 2016 and November 2018 that totaled 125 basis points in the deposit rate. According to a released statement, the lull in Sri Lankan growth was exacerbated by this year’s Easter Sunday terrorist massacre and global uncertainties related to trade. Many other central banks have also relaxed monetary policies recently, and “inflation is expected to remain in mid-single digit levels in the medium term.”

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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