Central Bank maintains policy interest rates at current levels

 

Sri Lanka’s central bank held interest rates steady on Thursday, as widely expected, but said it expected a moderation in market interest rates in line with prevailing policy rates. 

“The Board was of the view that the prevailing tight monetary policy stance is necessary to rein in any underlying demand pressures in the economy,” the central bank said in a statement, adding it that expected a moderation in the excessive market interest rates. 

“If an appropriate downward adjustment in the market interest rates would not take place in line with the envisaged disinflation path, the central bank will be compelled to impose administrative measures to prevent any undue movements in market interest rates,” it added. The CBSL has raised rates by a record 950 basis points this year to battle runaway inflation. 

“Economic activity is expected to make a gradual, yet sustainable recovery, supported by envisaged improvements in supply conditions, improved market confidence, and the impact of corrective policy measures being implemented to stabilise the economic conditions,” it said in the statement.