The Monetary Board of the Central Bank of Sri Lanka (CBSL) has decided to reduce decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) with the aim of stabilising inflation and to stimulate economic growth, The CBSL announced.
The decision was taken at its Monetary Board meeting held yesterday (30).
Accordingly,the SDFR and SLFR of the Central Bank has been reduced by 50 basis points to 7.50 per cent and 8.50 per cent, respectively.
"The Board arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy, with the broad aim of stabilising inflation at mid-singledigit levels in the medium term to enable the economy to reach its potential," THe CBSL said.
A dovish approach to monetary policy is observed globally
Driven by a number of factors such as increased trade tensions, weakened business confidence and softened external demand, a slowdown in global economic growth is observed.
"This has prompted key advanced economies to become increasingly dovish, while several emerging market economies have also relaxed their monetary policy stance to support economic activity, given subdued inflation pressures," CBSL said.
Following the modest growth in 2018, the economy is expected to have grown at a higher pace during the first quarter of 2019, mainly due to improved performance in Agriculture and Industry-related activities.
However, the Central Bank added that the Easter Sunday attacks have affected confidence and sentiments of economic agents, particularly disrupting tourism and related activities.
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