Central Bank Holds Policy Interest Rates Steady at Current Levels

Central Bank

On August 23, 2023, during its convened meeting, the Monetary Board of the Central Bank of Sri Lanka concluded to uphold the prevailing levels of the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) at 11.00 percent and 12.00 percent, respectively.

This resolution was reached following an extensive evaluation of ongoing and projected trends in both the domestic and global economies. The Board acknowledged the substantial relaxation of monetary conditions introduced since June 2023. Recognizing the favorable response of market interest rates to the preceding monetary policy adjustments and aiming to accommodate the potential for further interest rate alignment in the markets, the Monetary Board opted to retain the existing rates.

However, the Board also noted the presence of elevated market interest rates on specific lending products, which deviate from the current monetary policy position. Additionally, with an expectation of a swifter decline in overall market lending interest rates in line with recent monetary policy actions, the Board decided to take targeted administrative actions. These actions intend to curtail particular lending interest rates deemed excessive and direct licensed banks to effectuate a suitable reduction in overall rupee lending interest rates in the forthcoming period.