Sri Lanka cenbank eases policy with new single benchmark rate
Sri Lanka's central bank set a new single policy rate of 8% on Wednesday, easing monetary settings below previously used benchmarks, in an effort to shore up the island nation's fragile recovery from a deep financial crisis.
The introduction of an overnight policy rate (OPR), which had been flagged as likely earlier this year, would help markets more easily adjust to lower rates and help foster growth, the Central Bank of Sri Lanka (CBSL) said.
Until now it set two key rates, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), which economists had expected would be reduced by 25 basis points each to 8% and 9%, respectively.
The SDFR and SLFR will no longer be considered policy interest rates, CBSL said but added that banks can continue to use them to borrow or lend from it and these would be set 50 basis points on either side of the OPR.
