Sri Lanka central bank raises rates to 21-year high to contain inflation

The Central Bank of Sri Lanka (CBSL) raised its key rates by a full percentage point on Thursday to tackle record high domestic inflation and to contain any build-up of underlying demand.

The Standing Lending Facility rate was raised to 15.50% while the Standing Deposit Facility Rate rose to 14.50%, the highest in 21 years, Reuters reports.

Inflation touched a record 54.6% year-on-year in June while food inflation accelerated to 80.1%.

“The Board was of the view that a further monetary policy tightening would be necessary to contain any build-up of adverse inflation expectations,” CBSL said in a statement.

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