New Benchmark Rate to Bolster Growth

Sri Lanka’s central bank set its new benchmark interest rate at 8% to bolster the economy’s recovery from the worst crisis in decades.

The change to a new benchmark means the effective reduction in the policy interest rate would be around 50 basis points, the central bank said in a statement.

The decision to ease monetary policy is to “ensure that inflation treads towards the inflation target of 5% while supporting the economy to reach its full capacity,” the central bank said.

The Central Bank of Sri Lanka said Tuesday that it is introducing the overnight policy rate as its primary tool to “signal and operationalize its monetary policy stance.” The benchmark rate replaces a system of two rates.