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Monetary Board increases interest rates drastically to tackle runaway inflation; highest levels in 21 years

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4 years ago

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The Monetary Board on Wednesday (06) increased the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 100 basis points to 14.50 per cent and 15.50 per cent, respectively.That had been done to tackle rising domestic inflation, the Central Bank of Sri Lanka (CBSL) said, explaining the reasons for the Monetary Board decision, adding that these rates are at the highest in 21 years.

he Bank said it had noted a higher-than-expected increase of headline inflation recently.The high inflation is expected to remain in the period ahead, thus the Monetary Board was of the view that a further monetary policy tightening would be necessary to contain any build-up of adverse inflation expectations.The CBSL said that the policy adjustments would help Sri Lanka stabilise its inflation to between 4 and 6 percent in the medium term.

The Bank said that they considered the impact of tighter monetary conditions on overall economic activity, including the micro, small, and medium scale businesses, and the financial sector performance, among others, against far reaching adverse consequences of any escalation of price pressures across all sectors of the economy in the near term.

The Bank raised rates by 700 basis points in April but made no further moves at its previous policy meeting in May.

Excerpts of the CBSL statement: “Central banks have become increasingly hawkish across the globe Central banks from around the world continue to tighten their monetary policies to counter sustained inflationary pressures, exacerbated by high petroleum and food prices arising from geopolitical tensions, and destabilising inflation expectations.

“Nevertheless, the outlook for the global economy has deteriorated recently amidst the global spread of inflation, substantial interest rate hikes, and escalation of geopolitical tensions. The unfolding of these events could have large negative spillover effects on emerging markets and developing economies in the period ahead.

“Domestic economic activity is expected to record a notable downturn in the near term As per the GDP estimates published by the Department of Census and Statistics (DCS), the Sri Lankan economy is estimated to have recorded a contraction of 1.6 per cent, year-on-year, in the first quarter of 2022. Domestic economic activity during the second quarter of 2022 is expected to have been severely affected by the continued supply side disruptions, primarily due to the shortages of power and energy.

“Amidst adverse developments on the domestic front, geopolitical tensions in Eastern Europe that have affected global commodity markets and supply chains could pose further risks to domestic economic growth in the near term.

“The trade deficit narrowed significantly in May 2022 over the corresponding period of last year, largely supported by the policy measures that were aimed at discouraging non urgent imports, alongside the constrained foreign exchange liquidity in the domestic foreign exchange market.

“Foreign exchange inflows in the form of workers’ remittances and tourism earnings remain lower than expected, impacted by unfavourable conditions both domestically and globally. The exchange rate, which underwent a severe bout of depreciation in March 2022, remains broadly stable with the introduction of market guidance from mid-May 2022.

“Gross official reserves, as at end June 2022, are estimated at US dollars 1.9 billion, including the swap facility from the People’s Bank of China equivalent to around US dollars 1.5 billion, which is subject to conditionalities on usability. Significant progress has been made with respect to negotiations with the International Monetary Fund (IMF) towards reaching a staff-level agreement on the Extended Fund Facility (EFF) arrangement in the near term, while negotiations with several bilateral and multilateral partners are ongoing to secure bridging financing. Moreover, expeditious arrangements are being made with regard to the external debt restructuring process.

“Ensuring external sector stability and overall macroeconomic stability requires commitment from all stakeholders of the economy, given the unprecedented balance of payments pressures and severe stresses experienced at present across all sectors of the economy.

The measures introduced by the Central Bank to ensure domestic monetary stability and external stability of the Sri Lanka rupee, need to be supported by coherent and consistent actions on the part of the Government, state-owned enterprises, private sector corporates, and banking and non-banking financial institutions, among others. Such co-ordinated response to crisis management would ensure public support and eventually help bring about normalcy to economic activity in the period ahead.”


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PM opens ‘Silver Age Center,’ an Elder Care, Training and Research Centre built with modern facilities in Kataragama

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3 hours ago

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2026/04/2

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Prime Minister Dr. Harini Amarasuriya stated that a society must be built where all senior citizens can lead lives of safety, freedom, happiness, health, mobility, and spiritual well-being, with their rights safeguarded. She further emphasized that this is a responsibility shared by both the government and society.

The Prime Minister made these remarks on Tuesday (31st of March) while virtually participating in the opening of the ’Silver Age Center,’ an Elder Care, Training and Research Centre constructed with modern facilities in Kataragama. The event was held at the Ministry of Rural Development, Social Security and Community Empowerment, located in the new Sethsiripaya building.

During the event, the Prime Minister was presented with a draft of regulations and guidelines related to the regulation of institutions that provide residential care for senior citizens, by representatives of the National Council for Senior Citizens.

Expressing her views further, the Prime Minister  stated:

“This project, which commenced in 2022, had been halted due to various reasons. However, we have now resumed the project and are pleased to hand it over to the public today.

One of the key commitments of our policy is to create a society that ensures safety and protects the rights of all. Everyone, from the young to the elderly, deserves to enjoy these rights, freedom, and happiness.

A significant portion of our population is rapidly transitioning into senior age. However, the age of 60 still represents an active stage of life where individuals can contribute meaningfully to society and the economy. Senior citizens have needs, as well as abilities and valuable experience. We must recognize that they can continue to engage with society and remain active contributors.

Institutions that provide services for senior citizens play a vital role, and maintaining them is a social responsibility. It is essential to ensure the rights and provision of necessary services for all senior citizens, whether they live within families, independently, or in institutional settings.

We must ensure access to healthcare, transportation, lifelong learning, freedom, happiness, and spiritual well-being for senior citizens, while safeguarding their rights.

We should move beyond the traditional concept of ’elders homes’ and instead develop institutions that cater to the diverse needs of senior citizens, enabling them to spend their later years with dignity and respect.”

The opening of the ’Silver Age Center,’ Elder Care, Training and Research Centre, was carried out by Deputy Minister of Trade, Commerce, Food Security and Cooperative Development, R. M. Jayawardhana, along with regional public representatives and government officials. The occasion was attended virtually by the Minister of Rural Development, Social Security and Community Empowerment, Dr. Upali Pannilage; Secretary to the Ministry, Sampath Manthrinayake; and other ministry officials.

(Prime Minister’s Media Division)

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Heat Index at Caution Level in the Western, Sabaragamuwa, Southern, Eastern, North-western, Northern and North-central provinces and in Monaragala district

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4 hours ago

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2026/04/2

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Warm Weather Advisory
Issued by the Natural Hazards Early Warning Centre
Issued at 3.30 p.m. on 01 April 2026, valid for 02 April 2026.

The Heat index, the temperature felt on human body is likely to increase up to ‘Caution level’ at some places in the Western, Sabaragamuwa, Southern, Eastern, North-western, Northern and North-central provinces and in Monaragala district.

The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.


Effect of the heat index on human body is mentioned in the above table and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.

ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated.
Dress: Wear lightweight and white or light-colored clothing.

Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.

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Atmospheric conditions will be favorable for afternoon thundershowers in most parts of the island over the next few days from today (02 April)

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4 hours ago

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2026/04/2

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WEATHER FORECAST FOR 02 APRIL 2026
Issued at 05.30 a.m. on 02 April 2026 by the Department of Meteorology

Atmospheric conditions will be favorable for afternoon thundershowers in most parts of the island over the next few days from today (02 April)

Misty conditions can be expected at some places in the Central, Sabaragamuwa and Uva provinces during the early hours of the morning.

Showers or thundershowers will occur at several places in the Western, Central, Sabaragamuwa, Southern, Uva, North-western and North-central provinces after 2.00 p.m. Fairly heavy showers above 50 mm are likely at some places in the Western, Central and Sabaragamuwa provinces and in Kurunegala district. Showers may occur in the  Southern province and in Ampara, Batticaloa and Monaragala districts in the morning too.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.

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