Sri Lanka unexpectedly trims interest rate for 1st time in 3 years

ANKARA

The Sri Lankan Central Bank on Thursday surprisingly cut its benchmark rate for the first time in nearly three years as inflation slowed.

The standing lending facility rate was trimmed by 250 basis points to 14% from 16.5%.


"The Board arrived at this decision with a view to easing monetary conditions in line with the faster than expected slowing of inflation, gradual dissipation of inflationary pressures and further anchoring of inflation expectations," a bank statement read.

Economists had estimated that the rate would be held constant at 16.5%.

The move is expected to “provide an impetus for the economy to rebound from the historic contraction of activity witnessed in 2022, while easing pressures in the financial markets,” the bank said.

According to the latest data, Sri Lanka's annual consumer inflation rate stood at a 1-year low of 25.2% in May, easing from 35.3% in April.