INSUBCONTINENT EXCLUSIVE:
The Monetary Policy Board of the Central Bank of Sri Lanka (CBSL) has actually chosen to reduce the Overnight Policy Rate (OPR) by 25 bps to
7.75% at its conference held on Wednesday (21 ), thereby easing monetary policy further.The Board reached this decision after carefully
thinking about the advancements both locally and worldwide, the CBSL stated in a statement.The CBSL kept in mind that the Board is of the
view that this determined easing of financial policy stance will support guiding inflation towards the target of 5%, in the middle of
worldwide unpredictabilities and present suppressed inflationary pressures.Deflationary conditions have actually begun to alleviate given
that March 2025, as anticipated, it added, highlighting that the latest projections show indications of a more gradual pickup in inflation
in the near term than formerly anticipated.Accordingly, inflation is expected to turn favorable in early 3rd quarter of 2025 and slowly line
up with the target afterwards
Core inflation is likewise expected to increase gradually in the coming months from current low levels
Inflation expectations are also lining up with the inflation target
Current leading economic indications show continual progress in domestic financial activity, according to the CBSL.However, worldwide
unpredictabilities, which could have ramifications on Sri Lanka, have actually intensified from the time of the previous monetary policy
Most market interest rates have stabilised at lower levels, the statement added.With the existing policy easing, the Board expects even more
down changes in loaning rates
Credit streams to the economic sector remain strong with crucial economic sectors taking advantage of such expansion
This credit expansion is anticipated to continue throughout the year, with additional support from the most recent easing.Thus far during
the year, the external sector efficiency stays robust
This is supported by inflows in the kind of earnings from tourism and employees remittances, in spite of the widening of the trade deficit
Continued net forex purchases by the Central Bank helped strengthen the main reserves amidst debt servicing and other forex outflows
The Sri Lanka rupee tape-recorded some depreciation against the United States dollar so far throughout the year, following 2 years of yearly
appreciation against major currencies, it added.The Board will carefully examine inbound information on the domestic and worldwide fronts
and take measures, as suitable, to make sure that inflation stabilises around the target of 5%, while supporting the economy to reach its
potential, the declaration stated.
