Central Bank of Sri Lanka reduces its policy interest rates by 50 basis points

Central-Bank

Jan 30, 2020 (LBO) – Monetary Board of the Central Bank has decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 50 basis points to 6.50 percent and 7.50 percent, respectively.

Statutory Reserve Ratio (SRR), however, will remain unchanged at 5.00 percent.

The board said they arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy.

The Monetary Board, at its meeting held on 29 January 2020, was of the view that it is essential that market lending rates reduce further in order to support the envisaged pickup in credit growth and economic activity.

“This decision supports a continued reduction in market lending rates, thereby facilitating the envisaged recovery in economic activity given the favourable medium-term outlook for inflation, which is well anchored within the 4-6 percent range,” the board said.

“The Central Bank will continue to monitor macroeconomic and financial market developments with a view to maintaining aggregate demand conditions at appropriate levels, in the period ahead.”