The Central Bank of Sri Lanka (CBSL) and the government has decided to maintain the inflation rate of around 5% in the future, in accordance with the new CBSL Act, Governor Dr. Nandalal Weerasinghe said today.
He mentioned this while addressing a special press briefing on the first monetary policy review by the Monetary Policy Board today (Oct. 05).
Earlier today, the CBSL published its latest monetary policy review, which revealed the bank’s decision to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 100 basis points (bps) to 10.00% and 11.00%, respectively.
The decision to slash the SDFR and the SLFR was reached following a careful analysis of the current and expected developments, including low inflation and benign inflation expectations in the domestic economy, with the aim of stabilizing inflation at the envisaged 5% level in the medium term, thereby enabling the economy to reach its potential growth.
Meanwhile, the level of gross official reserves of the country has been estimated at around USD 3.5 billion as of the end of September 2023.
However, this includes the swap facility from the People’s Bank of China to the tune of USD 1.4 billion, which is subject to conditionalities on usability.
In its latest monetary policy review, the CBSL said that during the eight months ending in August 2023, Sri Lanka’s trade deficit decreased notably, with a significant decrease in merchandise imports due to lower demand and import restrictions, and a relatively low decline in merchandise exports.