Sri Lanka’s central bank doubled its key interest rates on Friday, raising each by an unprecedented 700 basis points to tame inflation that has soared due to crippling shortages of basic goods driven by a devastating economic crisis.
The heavily indebted country has little money left to pay for imports, meaning fuel, power, food and, increasingly, medicines are in short supply.
Street protests have been held nearly non-stop for more than a month, despite a five-day state of emergency and a two-day curfew.
The Central Bank of Sri Lanka’s (CBSL) monetary board raised its standing lending facility to 14.50 per cent and its standing deposit facility to 13.50pc. The build-up of aggregate demand, domestic supply disruptions, the plunge of the local currency and high prices of commodities globally could keep up the pressure on inflation, CBSL said in its monetary policy decision statement.
“The rate hike will give a strong signal to investors and markets that we are coming out of this as soon as possible,” governor P. Nandalal Weerasinghe said at a post-policy decision briefing.
Published in Dawn, April 9th, 2022
