“Inflation to be single digit by end of July”
The current declining inflation trend will continue and the inflation rate will come to single digit by the end of July 2023, Governor Central Bank Dr. Nandalal Weerasinghe said yesterday. The inflation in 2022 September was around 70% and from last April it reduced to less than 50% and last month was at 25%.
He also said that even the IMF had predicted that the local inflation would not reduce at such a fast pace. “Sri Lanka has also bettered IMF’s economic growth rate predictions on Sri Lanka.”
The Governor said that the lowering of inflation was as a result of several policies that were taken along with the lowering of fuel charges and appreciation of the rupee.
He said that the current imported and local food prices will further reduce when the importers start paying under the new dollar amount and when the local supply chains settle down. Dr. Weerasinghe also said that with other economic fundamentals falling into place the interest rates too would come down and the local banking sector must pass out this benefit to their customers.
He said that he expects the local banking officials to reduce the current high interest rates stamped on credit cards.
“The request towards reducing the credit card interest rates was made earlier as well,” he said. The Governor said that they are going to take stern action against cryptocurrency and institutions that promote pyramid schemes and already eight of them have been banned. He appealed from the public not to sell these schemes and revert back to the person who introduced the scheme or go to the police to recall the money they invested.
Meanwhile, the Monetary Board of the Central Bank of Sri Lanka, at its meeting held on May 31, 2023, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central
Bank by 250 basis points to 13% and 14% , respectively. The Board arrived at this decision with a view to easing monetary conditions in line with the faster than expected slowing of inflation, gradual dissipation of inflationary pressures and further anchoring of inflation expectations.
The commencing of such monetary easing is expected to provide an impetus for the economy to rebound from the historic contraction of activity witnessed in 2022, while easing pressures in the financial markets.