The Monetary Policy Board of the Central Bank of Sri Lanka has announced a reduction in both the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 25 basis points each. Effective July 22, 2024, the new rates are 8.25% for the SDFR and 9.25% for the SLFR.
This decision follows a thorough evaluation of current and anticipated macroeconomic conditions and the associated risks. The goal is to maintain inflation at the targeted 5% over the medium term while allowing the economy to reach its full potential. The reduction aims to signal a continuation of the accommodative monetary policy, encouraging a further decrease in market lending rates to bolster economic activity, especially with a favorable inflation outlook.
The Board noted that inflation is expected to stay significantly below the 5% target for several months before aligning with the medium-term goal. This adjustment reflects a strategic move to support economic growth amid a benign inflationary environment.