The Central Bank of Sri Lanka raised its benchmark interest rate by 75 bps to 8 percent on 14th November 2018 meeting, in the wake of a tumbling rupee. It was the first rate adjustment since February 2017, amid political uncertainty triggered by President Maithripala Sirisena’s decision to dissolve parliament. Policymakers said inflation is expected to remain at low single digit levels this year and is projected to be maintained in the targeted range of 4-6 percent during 2019 and thereafter with proper policy adjustments. The economic growth is likely to remain subdued and below the estimated level this year, amid a slowdown in exports, moderation in tourism related inflows and workers remittances. In order to promote a sustainable boost in economic growth, it is required a clear and transparent framework while implementing structural reforms. The standing lending facility rate was raised by 50 bps to 9 percent. Interest Rate in Sri Lanka averaged 7.82 percent from 2003 until 2018, 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 7.25 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 8.50 in 12 months time. In the long-term, the Sri Lanka Interest Rate is projected to trend around 7.50 percent in 2020, according to our econometric models.