Sri Lanka Cuts Key Rates to 11% and 12% Amid Easing Inflationary Pressures

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Sri Lanka Cuts Key Rates to 11% and 12% Amid Easing Inflationary Pressures

The Central Bank of Sri Lanka (CBSL) cut its key rates by 200 basis points on Thursday, as expected, amid easing inflationary pressures. The standing deposit facility rate and standing lending facility rate were both lowered to 11% and 12%, respectively.

The CBSL said that the decision to cut rates was based on the recent decline in inflation, which has fallen from a peak of 70% year-on-year in September to 12% in June. The central bank also cited the recent bailout agreement with the International Monetary Fund (IMF) as a factor in its decision to ease monetary policy.

The IMF bailout is expected to provide Sri Lanka with $2.9 billion in financial assistance over the next three years. The bailout will help to stabilize the Sri Lankan economy and support economic growth.

The CBSL said that it expects inflation to continue to decline in the coming months. However, the central bank warned that there are still risks to the inflation outlook, such as the ongoing war in Ukraine and the global food and energy crisis.

The decision to cut rates is a positive sign for the Sri Lankan economy. The lower interest rates will help to boost economic activity and support businesses and consumers. However, it is important to note that the IMF bailout is not a cure-all for Sri Lanka’s economic problems. The country will need to implement a number of reforms in order to achieve sustainable economic growth.

Sri Lanka cuts key rates as expected amid easing inflationary pressures

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