The Central Bank of Sri Lanka lowered its benchmark interest rate by 50 bps to 7.5 percent on May 31st 2019. This was the first rate cut in more than a year, amid anticipation of a lower 2019 GDP growth after tourism and investment plunged in the wake of Easter Sunday bombings. In 2018, the economy is struggling already, with growth easing to a 17-year low of 3.2 percent, due to prolonged political crisis and past policy tightening. Policymakers also highlighted that market lending rates had failed to show any sign of commensurate downward adjustment, despite recent liquidity injections and falls in the call money rate, government bond yields and the maximum interest rates on deposit products. In April, private sector credit growth slowed to near a 5-1/2-year low of 8.8 percent. The Standing Lending Facility Rate/SLFR was also cut by 50 bps to 8.5 percent. Interest Rate in Sri Lanka averaged 7.83 percent from 2003 until 2019, reaching an all time high of 10.50 percent in February of 2007 and a record low of 6 percent in April of 2015.
Interest Rate in Sri Lanka is expected to be 8.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Sri Lanka to stand at 8.00 in 12 months time. In the long-term, the Sri Lanka Interest Rate is projected to trend around 7.00 percent in 2020, according to our econometric models.