Sri Lanka’s central bank raised its key interest rates by an unprecedented 700 basis points on Friday to manage inflation, which has skyrocketed due to acute shortages of essential necessities brought on by the country’s devastating economic crisis.
Fuel, power, food, and, increasingly, medicines are in short supply since the deeply indebted economy has little money left to pay for imports.
Despite a five-day state of emergency and a two-day curfew, street protests have been ongoing for more than a month.
The monetary board of the Central Bank of Sri Lanka increased the standing lending facility to 14.50 percent and the standing deposit facility to 13.50 percent.
The build-up of aggregate demand, domestic supply disruptions, the depreciation of the local currency, and high global commodity prices, according to CBSL’s monetary policy decision statement, might keep inflation pressures high.
At a post-policy decision conference, governor P. Nandalal Weerasinghe said, ‘the rate hike will send a strong signal to investors and markets that we are coming out of this as quickly as possible.’
Post Your Comments