The Central Bank of Sri Lanka (CBSL) says it has significantly tightened its monetary policy stance to stabilize the country’s economy.
In a statement, the CBSL said its Monetary Board has decided to increase the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 700 basis points to 13.50 per cent and 14.50 per cent, respectively, effective from the close of business on 08 April 2022.
The decision was reached at the Monetary Board’s meeting held today (April 08).
The CBSL said the Monetary Board had noted the inflationary pressures that could further intensify in the period ahead, driven by the build-up of aggregate demand, domestic supply disruptions, exchange rate depreciation and the elevated prices of commodities globally.
Therefore, it was of the view that a substantial policy response is imperative to arrest the build-up of added demand-driven inflationary pressures in the economy and pre-empt the escalation of adverse inflationary expectations, to provide the required impetus to stabilize the exchange rate and also to correct anomalies observed in the market interest rate structure, the statement read further.
