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Sri Lanka central bank to hold rates as inflation stays high

CNA – Sri Lanka’s central bank is expected to keep rates unchanged at its policy meeting this week as it continues to support the debt-laden economy amid persistently high inflation.

The island nation defaulted on its foreign debt for the first time in April last year, as the worst financial crisis since its independence from Britain in 1948 crushed its economy.

Sri Lanka secured a USD2.9 billion bailout from the International Monetary Fund in March and aims to complete restructuring debt talks by September.

Thirteen out of the 15 analysts and economists polled by Reuters expect the Central Bank of Sri Lanka (CBSL) to hold benchmark rates steady tomorrow, at its fourth policy rate announcement this year. The decision will be announced via a statement at 7.30am (0200 GMT).

The CBSL held its standing deposit facility rate and standing lending facility rate at 15.50 per cent and 16.50 per cent, respectively, in April.

The central bank raised rates by a record 950 basis points last year to tame inflation and by 100 bps on March 3.

The Central Bank of Sri Lanka signage at its head office in Colombo, Sri Lanka. PHOTO: BLOOMBERG
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