In its inaugural monetary policy announcement for the year, the Central Bank of Sri Lanka declared today that it would uphold its existing policy rates, aiming to navigate through domestic and international economic complexities.
The Monetary Policy Board, after a thorough evaluation of both domestic and global macroeconomic conditions, resolved to keep the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) at their present levels of 9.00 percent and 10.00 percent, respectively.
The decision stems from the Board's commitment to sustaining inflation at the targeted 5 percent over the medium term, with an overarching goal of facilitating the economy to achieve its full potential, as stated by the Central Bank.
Acknowledging the recent tax changes and supply-side factors that could potentially exert upward pressure on inflation in the short term, the Board maintained confidence that these developments would not significantly alter the medium-term inflation outlook.
In addition, the Board recognized the leeway created by previous monetary policy easing measures and the diminishing risk premiums associated with government securities. This, in turn, provides room for further downward adjustments in market lending interest rates.
Emphasizing the importance of promptly passing on the benefits of reduced market lending interest rates to businesses and individuals, the Board underscored the need for financial institutions to play a proactive role in this process.
As the Central Bank navigates through economic challenges, the decision to maintain policy rates reflects a strategic approach to balance inflationary concerns and stimulate economic growth, all within the context of a dynamic global economic landscape.
