Sri Lanka Central Bank further reduces interest rates

Colombo, Serendib Time (May 22) –Sri Lanka Central Bank of Sri Lanka announced a further reduction in its Overnight Policy Rate (OPR), signaling a continued easing of monetary policy to support economic growth and steer inflation towards its desired target, a statement from it said on Thursday.

At its meeting held yesterday, the Monetary Policy Board of the CBSL decided to reduce the OPR by 25 basis points (bps) to 7.75%. This marks another step in the central bank’s strategy to provide liquidity and stimulate economic activity, the Central Bank said.

The Board’s decision was made after a thorough evaluation of both domestic and international economic developments. The central bank believes that this “measured easing of monetary policy stance” is crucial for guiding inflation towards its medium-term target of 5%, according to the Central Bank.

The move comes amidst prevailing subdued inflationary pressures and ongoing global uncertainties. Analysts suggest that the CBSL’s decision reflects confidence in the disinflationary trend and aims to provide a fillip to economic recovery while maintaining price stability. This reduction is expected to lower borrowing costs for businesses and consumers, potentially encouraging investment and spending, the Central Bank added.