{"id":136530,"date":"2023-08-22T15:06:53","date_gmt":"2023-08-22T22:06:53","guid":{"rendered":"https:\/\/www.lankaweb.com\/news\/items\/?p=136530"},"modified":"2023-08-22T15:06:53","modified_gmt":"2023-08-22T22:06:53","slug":"sri-lanka-central-bank-likely-to-cut-rates-again-as-inflation-eases","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2023\/08\/22\/sri-lanka-central-bank-likely-to-cut-rates-again-as-inflation-eases\/","title":{"rendered":"Sri Lanka central bank likely to cut rates again as inflation eases"},"content":{"rendered":"

Courtesy Business Recorder<\/em><\/span><\/h2>\n\n\n

COLOMBO: Sri Lanka\u2019s central bank is expected to further loosen monetary policy on Thursday, albeit by a smaller degree than previously, as it looks to use the rapid decline in inflation as an opportunity to foster growth and put the economy firmly on a path of recovery.<\/strong><\/p>\n\n\n\n

The median estimate in a Reuters poll of 15 economists and analysts predicts a 100-basis-point cut in both the Standing Deposit Facility Rate and the Standing Lending Facility rate, taking them to 10% and 11%, respectively.<\/p>\n\n\n\n

The Central Bank of Sri Lanka (CBSL) has already reduced rates by 450 bps in two moves over June and July.<\/p>\n\n\n\n

Sri Lanka\u2019s economy was crushed last year under the worst financial crisis in over seven decades with inflation sky-rocketing and foreign exchange reserves falling to record lows, severely stunting the island nation\u2019s ability to import essential commodities.<\/p>\n\n\n\n

CBSL responded by hiking rates by a total 1050 bps until March to contain inflation and rebuild its dollar kitty.<\/p>\n\n\n\n

Having secured a $2.9 billion rescue package from the International Monetary Fund (IMF) in March, the Sri Lankan economy has gradually stabilised.<\/p>\n\n\n\n

Inflation measured in the key Colombo Consumer Price Index eased to 6.3% in July from a high of 69% last September. Inflation was at 12% in June.<\/p>\n\n\n\n

The steep reduction in inflation is creating space for further easing, analysts said, although some predicted the apex bank would wait and watch for the time being.<\/p>\n\n\n\n

An additional rate cut on Thursday would help close the gap between policy rates and interest rates of short-term government securities, some analysts added.<\/p>\n\n\n\n

Despite earlier cuts there is a gap of about 300 basis points, which needs to reduce for lending rates to come down,\u201d said Visaahan Arumainayagam, analyst for Colombo-based broking firm Asha Securities.<\/p>\n\n\n\n

The decision will be announced via a statement at 7:30 a.m. (0200 GMT) on Thursday.<\/p>\n\n\n\n

A shift of focus to improving growth is needed after the economy contracted 7.8% in 2022 and is projected to shrink 2% this year, economists said.<\/p>\n\n\n\n

An IMF team will arrive in Colombo in mid-September for the first review of the IMF programme and Sri Lanka is also working to wrap up debt restructuring talks by the end of next month.<\/p>\n","protected":false},"excerpt":{"rendered":"

Courtesy Business Recorder COLOMBO: Sri Lanka\u2019s central bank is expected to further loosen monetary policy on Thursday, albeit by a smaller degree than previously, as it looks to use the rapid decline in inflation as an opportunity to foster growth and put the economy firmly on a path of recovery. The median estimate in a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-136530","post","type-post","status-publish","format-standard","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/136530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=136530"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/136530\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=136530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=136530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=136530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}