Sri Lanka's central bank keeps policy rates unchanged

January 23, 2024 (MLN): The Monetary Policy Board of the Central Bank of Sri Lanka, at its meeting held on 22 January 2024, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 9% and 10%, respectively.

The Board arrived at this decision following a comprehensive assessment of domestic and international macroeconomic developments in order to maintain inflation at the targeted level of 5% over the medium term, while enabling the economy to reach its potential.

The Board took note of the effects of the recent developments in taxation and supply-side factors that are likely to pose upside pressures on inflation in the near term.

However, the Board viewed that the impact of these developments would not materially change the medium-term inflation outlook.

Further, the Board noted the space created by past monetary policy easing measures and the decline in the risk premia attached to government securities for further downward adjustment in market lending interest rates.

The Board underscored that the envisaged benefit of further reduction in market lending interest rates needs to be adequately and swiftly passed on to the businesses and individuals by financial institutions.

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