Sri Lanka’s Central Bank Raises Key Rates To Curb Inflation

• Sri Lanka’s Central Bank has raised its key interest rates to their highest levels in more than 20 years to try to contain inflation that has added to the country’s economic woes. The central bank raised its Standing Deposit Facility Rate by 100 basis points to 14.50%. The move is expected to help draw more funds into the banking sector. It also raised the Standing Lending Facility Rate that it charges commercial banks by 100 basis points, to 15.50%. The bank said it expects to tighten its monetary policy further to fully curb inflation, which rose to nearly 55% in June, while food inflation topped 80%. 
• Recent price hikes have been a severe blow, especially for the South Asian country’s poor and vulnerable groups as they endure their country’s worst economic crisis in memory, struggling with acute shortages of essentials such as food, fuel, and cooking gas, and medicines. 
• Two weeks ago, Prime Minister Ranil Wickremesinghe told lawmakers the economy had “collapsed.” On July 6, 2022, he announced he had called Russian leader Vladimir Putin to request credit support to help the country import fuel. 
• Fitch Solutions Country Risk & Industry Research forecast that it would push the Standing Deposit Facility Rate to 16.50% and the Standing Lending Facility Rate to 17.50% by the year’s end.

(Source: AP News)