(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here.
Sri Lanka kept its benchmark interest rate unchanged for a second month as it tries to balance a slowing economy with rising inflation.
In his final policy meeting before his departure, Governor Indrajit Coomaraswamy held the standing lending facility rate at 8%, the Central Bank of Sri Lanka said in a statement Friday. That was in line with forecasts of eight of the 10 economists surveyed by Bloomberg, with one predicting a rate cut of 25 basis points and another expecting a 50-basis-point cut.
Key Insights
- The standing deposit facility rate was left unchanged at 7%, while the statutory reserve ratio was kept at 5%
- The policy meeting was the first since Gotabhaya Rajapaksa won the Nov. 16 presidential election on a platform to boost national security and resurrect the ailing economy. The interim cabinet approved a plan to cut the value-added tax rate to 8% from 15%, in addition to several other measures to kickstart demand
- Growth slowed to a more than five-year low of 1.6% in the quarter ended June, while inflation accelerated to 5.4% in October, the fastest pace since August 2018
- Coomaraswamy, who took office in July 2016, will leave his post next month for personal reasons. After raising interest rates to a five-year high earlier in his term, he cut rates twice this year to revive growth after a series of bomb attacks in April weighed on the economy