Sri Lanka Interest Rate

The Central Bank of Sri Lanka introduced a single policy rate of 8% on Wednesday as part of efforts to drive the country's recovery from a severe financial crisis. This marks a transition from the dual policy rate mechanism to a single overnight policy rate, effective November 27, 2024. The central bank noted that this shift simplifies the monetary policy framework, with an effective policy rate reduction of approximately 50 bps from the current level of the Average Weighted Call Money Rate (AWCMR), which will remain the operating target under the flexible inflation targeting framework. Previously, the central bank operated with two key rates: the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), which economists had estimated would be reduced by 25 bps each to 8% and 9%, respectively. However, these rates will no longer serve as policy interest rates under the new framework, the central bank stated.