Sri Lanka central bank holds rates steady

Policy makers are assessing effects of interest hikes this year on cooling price growth, amid an unprecedented economic crisis.

The Central Bank of Sri Lanka (CBSL) has kept its key rates steady, a widely anticipated move as it awaits the effect of past hikes to trickle through the economy while a fall in global commodity prices is also expected to soothe domestic inflation.

The Standing Lending Facility rate stayed at 15.5 percent on Thursday, while the Standing Deposit Facility Rate remained at 14.5 percent.

Eleven out of 15 economists and analysts polled by the Reuters news agency had expected rates to remain unchanged.

The central bank has raised rates by a record 950 basis points so far this year to battle high inflation in Sri Lanka, which is wilting under a severe economic crisis.

A foreign exchange shortage has left the government struggling to pay for essential imports of fuel, fertilisers, food and medicine.

Inflation hit 60.8 percent year-on-year in July, and food costs expanded by a searing 90.9 percent, according to the latest government data.

“In arriving at this decision, the board considered the latest model-based projections, which point towards a larger than expected contraction in activity and a faster than expected easing of price pressures,” CBSL said in a statement.

Agencies