Sri Lanka central bank to keep policy rates steady

The Central Bank of Sri Lanka (CBSL) on Thursday announced that the Bank would keep policy rates at their current levels while maintaining inflation at targeted levels and supporting economic recovery. In its 7th monetary policy review for the year, the Central Bank of Sri Lanka announced that the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) would remain at 5 percent and 6 percent, respectively, until the next review on November 25, as per reports.

The CBSL said that inflation had gone up in recent months, partly due to surging global commodity prices which would cause headline inflation to deviate from the targeted range in the near term. It added that the country recorded real growth of 4.3 percent and 12.3 percent in the first and second quarters of 2021 respectively. "Available indicators and projections suggest that the real economy would grow by about 5 percent in 2021, and gradually traverse to a high and sustained growth trajectory over the medium term, following near-term stabilization measures that are being put in place by the government and the central bank," the CBSL said. "While such supply-side developments in the near term do not warrant monetary policy tightening, measures already taken by the Central Bank in relation to interest rates and market liquidity would help stabilise demand pressures over the medium term," the CBSL said.

The CBSL noted that export revenue has crossed USD1 billion for three consecutive months, with additional inflows from tourism expected in the coming months.


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