Sri Lanka's Central Bank of Sri Lanka (CBSL) said it seeks to consolidate monetary policy operations under a single benchmark rate.
Governor of the CBSL Nandalal Weerasinghe made this remark while announcing the 2024 annual policy statement in Colombo, Wednesday.
The decision was made following the recognition of the limitations of its current system, which employs both Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR).
The Governor added that the move will ensure better signaling of its monetary policy stance.
Meanwhile, the central bank has been mandated to keep headline inflation at 5 percent for the next three years, with a 2 percent leeway on either side.
Weerasinghe said the new monetary policy framework's operative target is the average overnight call money rate, and no change in monetary policy is warranted at this point because inflation expectations remain well anchored.
The Bank unexpectedly cut rates in November, bringing the total rate cuts since June to 650 basis points, and announced that it would suspend its monetary policy easing in the medium term.
Following the worst financial crisis in decades, Sri Lanka experienced record high inflation last year.