Sri-Lanka - Taxa De Juro

Sri Lanka's central bank left its benchmark interest rate unchanged at 7 percent at its November meeting, saying the decision is consistent with the aim of maintaining inflation in the desired 4-6 percent range while supporting economic growth to reach its potential over the medium term. Meantime, domestic economic growth is expected to remain subdued in 2019, and a gradual recovery is expected over the medium term. The Monetary Board observed that the recent tax revisions would support lower inflation and higher economic growth in the short term, but was of the view that greater clarity with regard to the medium-term fiscal path of the government is required to assess the impact on the economy over the medium term. The Standing Lending Facility Rate (SLFR) was also kept at 8 percent.

Sri Lanka's central bank left its benchmark interest rate unchanged at 7 percent at its October meeting, saying the decision is consistent with the aim of maintaining inflation in the desired 4-6 percent range while supporting economic growth to reach its potential over the medium term. Policymakers noted that the annual inflation rate quickened to 5.0 percent in September, boosted by food prices that might cause headline inflation to remain somewhat elevated during the rest of 2019. Still, amid subdued demand conditions, core inflation is expected to revert to low levels from January 2020, mainly with the dissipation of the effect of the one-time large adjustment to house rentals in early 2019. The Committee added that domestic economic growth is expected to remain subdued in 2019, and a gradual recovery is expected over the medium term. The Standing Lending Facility Rate (SLFR) was also kept at 8 percent.

The Central Bank of Sri Lanka lowered its benchmark interest rate by 50 bps to 7 percent during its August meeting. Policymakers said that the decision aims to continue supporting economic activity in the context of low inflation. The Committee added that domestic economic growth is expected to recover gradually towards its potential in the medium term, still domestic and global headwinds are likely to delay the recovery. Policymakers noted that the annual inflation rate fell to 3.3 percent in July from 3.8 percent in June, partly driven by subdued food prices and it is projected to remain around the lower bound of the target range (4-6 percent) during the rest of 2019. The central bank also slashed the standing lending facility rate (SLFR) by 50 basis points to 8 percent.

The Central Bank of Sri Lanka held its benchmark interest rate at 7.5 percent during its July meeting, saying that the current policy stance is consistent with the aim of maintaining inflation well anchored within the 4-6 percent target range while supporting economic growth to reach its potential over the medium term.

The Central Bank of Sri Lanka lowered its benchmark interest rate by 50 bps to 7.5 percent on May 31st 2019. This was the first rate cut in more than a year, amid anticipation of a lower 2019 GDP growth after tourism and investment plunged in the wake of Easter Sunday bombings. In 2018, the economy is struggling already, with growth easing to a 17-year low of 3.2 percent, due to prolonged political crisis and past policy tightening. Policymakers also highlighted that market lending rates had failed to show any sign of commensurate downward adjustment, despite recent liquidity injections and falls in the call money rate, government bond yields and the maximum interest rates on deposit products. In April, private sector credit growth slowed to near a 5-1/2-year low of 8.8 percent. The Standing Lending Facility Rate/SLFR was also cut by 50 bps to 8.5 percent.

The Central Bank of Sri Lanka kept its standing deposit facility rate steady at 8 percent during its April meeting, saying GDP growth is expected to improve gradually but remain moderate in 2019 while inflation is likely to remain within the desired range of 4-6 percent. The standing lending facility rate was also left unchanged at 9 percent.