Sri Lanka Central Bank Keeps Rates Steady Amid Economic Crisis

Sri Lanka's central bank kept its key interest rates unchanged on Wednesday as runaway inflation showed signs of slowdown, and amid the country's negotiations with the International Monetary Fund to secure a $2.9 billion rescue deal to get the economy back on track.

The Monetary Board of the Central Bank of Sri Lanka decided to maintain the Standing Deposit Facility Rate at 14.50 percent and the Standing Lending Facility Rate at 15.50 percent.

The previous change in the interest rate was a full percentage hike last July. The bank had hiked rates by a massive 700 basis points in April 2022.

The Board assessed that the current monetary policy stance is appropriate to ensure that underlying monetary conditions in the economy remain sufficiently contained to drive inflation along the envisaged disinflation path.

Although the headline and core inflation rates continued to decelerate at the end of 2022, inflation remained very high. The central bank expects downward adjustment in inflation to continue through 2023.