Central Bank maintains policy rates at current levels

Policy rates will be maintained at their current levels, the Central Bank of Sri Lanka said today, its first monetary policy announcement for the year.

The Monetary Policy Board has 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 9.00 percent and 10.00 percent.

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

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