CBSL further tightens its Monetary Policy Stance

The Monetary Board of the Central Bank of Sri Lanka (CBSL) has decided to incrase the intrest rates of the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR).

Accordingly, the SDFR and SLFR will be increased to 14.50% and 15.50% respectively.

The decision was announced following a meeting held at the CBSL yesterday.

Having noted the higher- than-expected escalation of headline inflation recently and the increased persistence of high inflation in the period ahead, the Board was of the view that a further monetary policy tightening would be necessary to contain any build-up of adverse inflation expectations. 

After having arrived at this decision, the Board weighed the impact of tighter monetary conditions on overall economic activities, including the micro, small and medium scale businesses, and the financial sector performance among others, against far reaching adverse consequences of any escalation of price pressures across all sectors of the economy in the near term. 

On balance, the Board was of the view that this policy adjustment would help guide inflation expectations to be anchored around the targeted level of headline inflation over the medium term, while curtailing any build-up of underlying demand pressures in the economy. (Chaturanga Samarawickrama)

Pix by Pradeep Dilrukshana