The strategic decision by the central bank's monetary policy board stems from a comprehensive evaluation of current developments.
 |
| The objective is to achieve inflation at the targeted level of 5 percent over the medium term while enabling the economy to reach at its full potential. Image: Collected |
COLOMBO, Sri Lanka:
In a move aimed at bolstering economic growth and stabilizing inflation, the Central Bank of Sri Lanka has reduced its key interest rates. The Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) have each been lowered by 100 basis points, bringing them to 9.00 percent and 10.00 percent, respectively, reads a statement issued on Friday.
The central bank's monetary policy board reached this decision following a thorough assessment of current and anticipated developments in both the domestic and global economies. The objective is to achieve and maintain inflation at the targeted level of 5 percent over the medium term while enabling the economy to reach and stabilize at its full potential.
The board acknowledged that near-term upside risks to inflation projections could emerge from supply-side factors stemming from expected developments domestically and globally. However, they determined that these near-term risks would not materially alter the medium-term inflation outlook, as public inflation expectations remain anchored and economic activity is projected to remain below par in the near to medium term.
The central bank stated that with this reduction of policy interest rates, along with the monetary policy measures implemented since June 2023, sufficient monetary easing has been effected to stabilize inflation over the medium term.
In 2022, Sri Lanka significantly raised interest rates to combat rising inflation. However, in 2023, rates have been lowered multiple times to stimulate economic growth.