By Uditha Jayasinghe
COLOMBO (Reuters) – Sri Lanka’s central bank kept its key policy rate unchanged for a second consecutive meeting on Wednesday to support to support the island nation’s recovery from a deep financial crisis.
The overnight policy rate of the central bank was held steady at 8%.
A dozen out of the 15 analysts and economists polled by Reuters had predicted the monetary authority will maintain its policy rate due to benign inflation and positive growth expectations while awaiting better market adoption of a new policy rate of 8% introduced last November.
The country grew a better-than-predicted 5% in 2024, a turning point after its economy tumbled into a financial crisis, exacerbated by a severe shortage of dollars, three years ago.
“The Board remains confident that the prevailing monetary policy stance will ensure that inflation will move towards the target of 5% while supporting the growth of the domestic economy,” the central bank said in its statement.
Inflation hit minus 4.2% year-on-year in February, well below the apex bank’s target of 5%.
Inflation is expected to reach positive territory by the middle of 2025 and be around targeted levels by year-end, the central bank said.
(Reporting by Uditha Jayasinghe, editing by Swati Bhat)
