Oct 14, Colombo: Sri Lanka’s Central Bank releasing the monetary policy review on Thursday said the Monetary Board has decided to continue the current monetary policy stance.
Accordingly, the Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 13 October 2021, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 5.00 per cent and 6.00 per cent, respectively.
The Board has decided to maintain rates after carefully considering the macroeconomic conditions and expected developments on the domestic and global fronts.
“The Board reiterated its commitment to maintaining inflation at the targeted levels over the medium term with appropriate measures, while supporting the economy to reach its potential in the period ahead,” the Bank said.
The Economic Research Department report said the Sri Lankan economy is making headway, despite the pandemic related disruptions as the global economic recovery is expected to continue despite large disparities across countries.
As per the estimates of the Department of Census and Statistics (DCS), the Sri Lankan economy witnessed a strong recovery during the second quarter of 2021, recording a real growth of 12.3 percent, year-on-year, following the growth of 4.3 percent, year-on-year, in the first quarter of 2021.
“With the gradual return to normalcy after phasing out the COVID-19 related lockdown measures, alongside the successful rolling out of the COVID-19 vaccination programme and growth supportive policy measures, the momentum of economic activity is expected to sustain in the period ahead,” the Bank said.
The planned coordinated efforts by the Government and the Central Bank are expected to strengthen the external sector in the period ahead although some inflationary pressures are observed, particularly due to emerging global price developments.
Considering the current and expected macroeconomic developments, the Monetary Board was of the view that the current level of policy interest rates is appropriate.
The Central Bank said it will continue to monitor domestic and global macroeconomic and financial market developments and stand ready to take appropriate measures, as and when necessary, with the aim of maintaining inflation in the desired range under the flexible inflation targeting framework in the medium term, while supporting and sustaining the economic recovery.