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CB reduces interest rates by 100 basis points to tackle inflation and ease borrowing costs

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The Monetary Policy Board of the Central Bank, at its meeting held on Thursday (23), decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 100 basis points (bps) to 9.00 percent and 10.00 percent, respectively, CB said in a press release.

It said: The Board arrived at this decision following a careful analysis of the current and expected developments in the domestic and global economy, with the aim of achieving and maintaining inflation at the targeted level of 5 percent over the medium term, while enabling the economy to reach and stabilise at the potential level.

The Board took note of possible upside risks to inflation projections in the near term due to supply-side factors stemming from the expected developments, domestically and globally. However, the Board viewed that such near term risks would not materially change the medium-term inflation outlook, as inflation expectations of the public remain anchored and economic activity is projected to remain below par in the near to medium term. Further, the Board viewed that with this reduction of policy interest rates, along with the monetary policy measures carried out since June 2023, sufficient monetary easing has been effected in order to stabilise inflation over the medium term.

Hence, the Monetary Policy Board underscored the need for a swift and full pass through of monetary easing measures to market interest rates, particularly lending rates, by the financial institutions, thereby accelerating the normalisation of market interest rates in the period ahead.

Headline inflation continues to remain low, reflecting subdued demand conditions. Headline inflation, as measured by the year-on-year change in the Colombo Consumer Price Index (CCPI, 2021=100), was recorded at 1.5 percent in October 2023 compared to 1.3 percent in September 2023.

Food inflation continued to be negative (year-on-year) for the fourth consecutive month in October 2023. The National Consumer Price Index (NCPI, 2021=100) based headline inflation (year-on-year) was recorded at 1.0 percent in October 2023, compared to 0.8 percent in September 2023.

Both CCPI and NCPI based core inflation (year-on-year), which reflects underlying demand pressures in the economy, moderated further in October 2023, reflecting the subdued demand pressures in the economy. A one-off upward movement in inflation is expected in the near term, driven mainly by the changes to the Value Added Tax (VAT) proposed by the Government effective January 2024. The spillover effects of tax measures and other developments are likely to be muted due to subdued underlying demand pressures; hence, this rise in inflation is expected to be transitory. Accordingly, headline inflation over the medium term is expected to converge towards the targeted level of 5 percent, supported by appropriate policy measures.

Market interest rates are expected to normalise in the period ahead. Market interest rates continued to adjust downwards, and most benchmark interest rates have declined significantly. Meanwhile, the yields on government securities are also adjusting downwards with falling risk premia. The reduction of policy interest rates by 100 bps in this monetary policy review is expected to create further space for market interest rates to adjust downward and normalise in the period ahead. Reflecting the transmission of the relaxed monetary policy stance, outstanding credit to the private sector by the banking sector expanded on a monthly basis in September as well as in October 2023 based on provisional data. With the moderation of market lending interest rates, credit to the private sector is expected to increase further in the period ahead, thereby supporting the envisaged rebound of domestic economic activity.

The Board anticipates a swift, sizeable and broad-based reduction in overall market lending interest rates in line with the monetary policy easing measures effected since June 2023. Such adjustment in interest rates is imperative to ease the domestic monetary conditions further. The Board stressed the need for all licensed banks to take swift measures to reduce market lending interest rates to ensure that the benefits of the series of monetary policy easing measures are adequately passed on to businesses and households.



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CoPF Chief steps up pressure on Prez to appoint AG

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President Dissanayake / Dr. de Silva

House Committee, BASL and TISL take common stand

The Chairman of the Committee on Public Finance (CoPF) has found fault with President Anura Kumara Dissanayake for what it calls the inordinate delay in appointing a new Auditor General. CoPF Chairman Dr. Harsha de Silva, in a letter dated Dec. 22 addressed to President Dissanayake, has pointed out that the Office of the AG remains vacant.

The SJBer raised the serious issue with the President close on the heels of the interventions made by the Bar Association of Sri Lanka (BASL) and Transparency International Sri Lanka (TISL).

Dr. de Silva has emphasised that the failure on the part of the President to fill the vacancy is a matter of serious concern. The Constitutional Council has repeatedly rejected the President’s nominee while questioning his suitability.

The following is the text of CoPF Chairman’s letter to the President: ” I wish to respectfully bring to your attention that the Office of the Auditor General has remained vacant since 7 December, following the conclusion of the tenure of the Acting Auditor General on 6 December. At present, there is neither a substantive nor an acting Auditor General in the country, and consequently, the Audit Service Commission remains without a chairman. Given the prevailing circumstances of the country, the continuous absence of this constitutionally mandated post is a matter of serious concern.

Under Article 148 of the Constitution, Parliament exercises full control over public finance. The effective exercise of this control is constitutionally dependent on the continuous functioning of an independent audit mechanism.

Article 154 of the Constitution establishes the office of the Auditor General and mandates the audit of all State institutions and the reporting of such audits to Parliament. The absence of an Auditor General disrupts this mandatory constitutional process. This mandate is further reinforced by Section 3 of tile National Audit Act, No. 19 of 2018.

Moreover, the oversight functions of the Committee on Public Accounts, and the Committee on Public Enterprises in terms of Standing Orders 119, and 120 are directly dependent on audit reports issued by the Auditor General. The continued vacancy therefore materially undermines parliamentary financial oversight.

As the Committee on Public Finance (CoPF) is responsible for reviewing the budget and work programme of the National Audit Office, I consider it my duty, as the Chair of the CoPF, to urge the immediate appointment of the Auditor General.

Accordingly, I respectfully request that urgent action be taken to appoint a suitable, qualified and experienced individual as the Auditor General in accordance with Article 153(1) of the Constitutional, without further delay.”

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Indian HC and Consulates extend humanitarian assistance to families affected by Cyclone Ditwah

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HC Jha handing over relief

As part of India’s continued assistance to Sri Lanka under ‘Operation Sagar Bandhu’, the Indian High Commission in Colombo, Assistant High Commission in Kandy and Consulate General of India in Jaffna conducted humanitarian assistance distribution drives for families affected by Cyclone Ditwah in different parts of the country, the Indian HC said.

The text of the HC statement: “On 18 December, High Commissioner of India Santosh Jha distributed relief kits among affected families in the Kolonnawa in coordination with All Ceylon Sufi Spiritual Association and among children of Bhaktivedanta Children’s Home ‘Gokulam’ at ISKCON Temple in Colombo. Earlier this month, the High Commissioner also distributed assistance among residents of Nayanalokagama, village specially designated for the visually impaired, and among affected families in Negombo in the Gampaha District.

Between 9 and 19 December, Assistant High Commission of India in Kandy distributed essential food items and supplies among hundreds of affected families in Kandy, Nuwara Eliya and Badulla Districts.

Similarly, the Consulate General of India in Jaffna carried out several distribution drives for affected families in Mannar, Mullaitivu and Kilinochchi, as well as island territories of the Jaffna District.

This assistance is over and above several tonnes of food and relief material handed over by India to the Government of Sri Lanka under ‘Operation Sagar Bandhu’.”

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Sri Lanka prepares to deploy fresh military contingent under UN command

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Latest SLAF contingent for overseas deployment under UN command(pic courtesy SLAF)

The passing-out parade of the No. 11 Contingent of the Aviation Unit assigned to the United Nations Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA) took place on 23 December 2025 at the SLAF Base Katunayake. The Commander of the Air Force, Air Marshal Bandu Edirisinghe, took the salute as the parade was led by Group Captain Asiri Pathirage, the Contingent Commander of the 11th contingent.

The heli-deployment, comprising 22 officers (including two female officers) and 88 airmen (including five airwomen), is scheduled to depart for the Central African Republic in the middle of January.

During the address to the parade, the Commander noted that the United Nations Headquarters has praised the Sri Lanka Air Force contingents stationed in the Central African Republic for their bravery, professionalism and dedication to duty. He emphasized that this accomplishment reflects the trust and confidence placed in the military forces of Sri Lanka by the international community, enhancing the nation’s standing on the global stage. This mission is also anticipated to bring significant economic benefits to the country.

The parade was attended by the Chief of Staff, Deputy Chief of Staff, members of the Air Force Board of Management, officers and airmen of SLAF Base Katunayake and most specifically, the beloved family members of the Aviation Contingent.

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