Sri Lanka’s Central Bank raises rates to contain record high inflation

Central Bank of Sri Lanka

The Central Bank of Sri Lanka (CBSL) raised its key rates by a full percentage point on Thursday to tackle record high domestic inflation and to contain any build-up of adverse inflation expectations.

The Standing Lending Facility rate was raised to 15.50% while the Standing Deposit Facility Rate rose to 14.50%.

“The Board was of the view that this policy adjustment would help guide inflation expectations to be anchored around the targeted level of headline inflation over the medium term, while curtailing any build-up of underlying demand pressures in the economy,” CBSL said in its statement.

The island of 22 million people is wilting under a severe foreign exchange shortage that has it struggling to pay for essential imports of fuel, fertilisers, food and medicine.