INSUBCONTINENT EXCLUSIVE:
Monetary Board of the Central Bank of Sri Lanka, has decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending
Facility Rate (SLFR) of the Central Bank at their current levels of 14.50 per cent and 15.50 per cent, respectively at its meeting held
yesterday (Oct 05).In arriving at this decision, the Board has considered the latest macroeconomic conditions, expected developments and
macroeconomic projections
The Board also noted the tight monetary conditions prevailing at present, the decelerating pace of inflation, and the envisaged disinflation
effects of tight monetary policy measures already in place, helping to mitigate any build-up of aggregate demand pressures, thereby
economic activity is expected to remain subdued during 2022, beforerecovering in 2023As per the GDP estimates published by the Department of
Census and Statistics (DCS), the real economy is estimated to have contracted by 4.8 per cent in the first half of 2022, on a year-onyear
basis.The economy is expected to contract in the second half of 2022 as well, impacted by tighter monetary and fiscal conditions, along with
the continuation of supply-side constraints and uncertainty surrounding the business environment amidst shortages of foreign exchange in the
monetary and liquidity conditionsMarket interest rates are continuously adjusting upwards reflecting the tight liquidity conditions in the
domestic money market and the further passthrough of significant monetary policy tightening measures introduced thus far by the Central
In August 2022, outstanding credit was extended to the private sector by commercial bankscontracted for the third consecutive month in
absolute terms, reflecting the impact of increased effective market lending interest rates, a moderation of economic activity, and measures
expected to continue during the remainder of the year, while a similar trend is expected in the growth of broad money (M2b) supply as
the near termHeadline inflation, based on the Colombo Consumer Price Index (CCPI), edged up in September 2022, driven mainly by the recent
revision of electricity and water tariffs and the increase in Value Added Tax (VAT)
tight monetary and fiscalconditions, expected improvements in domestic supply conditions, normalisation in global food and other commodity
prices, and the timely passthrough of such reductions to domestic prices, along with the favourable statistical base effect, will be
This article first appeared/also appeared in https://adaderana.lk
