Sri Lanka Central Bank cuts SDFR and SLFR by 50 basis points

May 31, 2019 (LBO) – The Monetary Board of the Central Bank, at its meeting held on 30 May 2019, has decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points to 7.50 percent and 8.50 percent, respectively.

The Central Bank said the Board arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy, with the broad aim of stabilising inflation at mid-single digit levels in the medium term to enable the economy to reach its potential.

At the last review of the monetary policy stance, the Central Bank provided forward guidance of a possible policy relaxation, if the current trends in the global financial markets, trade balance, and credit growth continue.

"These trends have continued, and in addition, the economy has been affected by the Easter Sunday attacks and its adverse spillover effects on related sectors," the Central Bank said.

"Along with the developments in the domestic financial markets so far during the year, the monetary policy decision to reduce policy interest rates is expected to induce a swift and sizable reduction in market lending rates."

Monetary Policy Decision: Policy rates reduced and SRR unchanged
Standing Deposit Facility Rate (SDFR) - 7.50%
Standing Lending Facility Rate (SLFR) - 8.50%
Statutory Reserve Ratio (SRR) - 5.00%

The release of the next regular statement on monetary policy will be on 12 July 2019.