Sri Lanka increases key rates to 21-yr high to fight inflation

Colombo: In an effort to fight inflation due to the ongoing economic crisis, the Monetary Board of the Central Bank of Sri Lanka’s decided to increase the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 100 basis points to 14.50 per cent and 15.50 per cent, respectively.
This was done to tackle the rising domestic inflation, the bank said, adding that these rates are at the highest in 21 years, reports Xinhua news agency.
The central bank said that they had noted a higher-than-expected increase in headline inflation recently.
Also Read SL to present debt restructuring programme to IMF by August: PM Wickremesinghe The high inflation is expected to remain in the period ahead, thus the Monetary Board was of the view that a further monetary policy tightening would be necessary to contain any build-up of adverse inflation expectations.
The central bank said that the policy adjustments would help Sri Lanka stabilise its inflation to between 4 and 6 percent in the medium term.
The bank said that they considered the impact of tighter monetary conditions on overall economic activity, 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.