Sri Lanka March Inflation Cools, Backing Case for Easing Policy
(Bloomberg) -- Sri Lanka’s inflation cooled for the second straight month in March, backing the central bank’s move to resume easing monetary policy to help support a rebound in the economy.
Most Read from Bloomberg
The consumer price index in Colombo rose 0.9% from a year ago, the Statistics Department said on Thursday. That compares with a 3.1% climb seen in a Bloomberg survey, and a 5.9% reading in February.
The Central Bank of Sri Lanka earlier this week unexpectedly lowered the standing lending facility rate by 50 basis points to 9.5%, after pausing in January. The monetary authority slashed borrowing costs by 650 basis points in 2023 to resuscitate the economy from an unprecedented crisis and a historic default.
In the latest move, the central bank said it had assessed subdued demand conditions, favorable near-term inflation dynamics and the absence of external sector pressures before deciding to renew its monetary easing cycle.
Sri Lanka’s annual growth is expected to turn positive this year and Central Bank Governor Nandalal Weerasinghe has said the monetary policy stance will remain accommodative for the economy to reach its full potential. The economy expanded for the second straight quarter in the three months to December, buoyed by an International Monetary Fund bailout and cheaper borrowing costs.
Last week, the South Asian nation secured an initial nod for a $337 million payout from the IMF even though further progress on debt restructuring remains key for the additional funding.
--With assistance from Tomoko Sato.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
