Sri Lanka keeps key rate at 15.5%

Bloomberg

Sri Lanka kept its benchmark interest rate unchanged for a fourth straight meeting as Asia’s fastest inflation showed signs of cooling while bankrupt economy seeks to turn the corner pending a crucial bailout.
The central bank of Sri Lanka held the standing lending facility rate at 15.5% on Wednesday, a move predicted by all five economists in a Bloomberg survey.
“The maintenance of the prevailing tight monetary policy stance is imperative to ensure that monetary conditions remain sufficiently tight to rein in inflationary pressures,” the central bank said. “Tight monetary conditions, together with the tight fiscal policy, are
expected to adjust inflation
expectations downward.”
The decision came a day after Governor Nandalal Weerasinghe said policymakers are starting to see disinflation and price gains should ease to single-digit levels by the end of 2023.
The monetary authority is seeing signs that excessive market interest rates are easing as liquidity improves and investor sentiment recovers in anticipation of “financing assurances” from official creditors, it said. There’s been “notable moderation” in yield on government securities along with deposit rates, paving the way for further easing in market rates, it said.