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Investing.com -- Sri Lanka’s central bank has decided to keep its overnight policy rate steady, aiming to bolster a stronger economic recovery as the nation gradually recovers from its most severe financial crisis in decades.
The Central Bank of Sri Lanka (CBSL) announced its decision to maintain the key rate at pre-crisis levels on Wednesday. This comes just days before the new government is set to present its first full-year budget in Parliament next month.
In a significant shift, the CBSL has moved towards a single policy rate system. The overnight policy rate, which was set at 8% in November, is now the sole benchmark.
This move marks a departure from the previous dual policy rate system where the CBSL set both a Standing Deposit Facility Rate (SDFR) and a Standing Lending Facility Rate (SLFR).
The decision to hold the rate steady aligns with market expectations. A poll of 13 analysts and economists revealed that 11 anticipated that the monetary authority would maintain its policy stance. This prediction was based on the current state of benign inflation and stronger growth.
According to a statement from the CBSL, the decision was made with a medium-term perspective. The aim is to ensure that inflation converges towards the target of 5%, while simultaneously supporting the economy to reach its potential.
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