Central Bank of Sri Lanka

May 19, 2022

The Central Bank of Sri Lanka Board had agreed to a shock and awe 700-basis point interest rate hike at their policy review in April and consequently decided this month to leave the standing deposit facility rate unchanged at 13.5%. “The Board was of the view that the policy measures that have already been implemented by the Central Bank would continue to be further transmitted to the financial markets, while some signs of tighter monetary policy already being observed in real economic activity.” Even at 13.5%, which compares to a pandemic low point of 4.5%, the interest rate remains far below CPI inflation of 29.8% as of April. Officials are prepared to tighten further if expected inflation continues to rise or inflation fails to ease back eventually.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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