The Monetary Board of the Central Bank of Sri Lanka, at a special meeting held on 06 May 2020, reviewed the current monetary policy stance and decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points to 5.50 per cent and 6.50 per cent, respectively, effective from the close of business on 06 May 2020. The Board arrived at this decision considering the necessity to further support the economy to weather the adverse economic impact caused by the COVID-19 pandemic, given subdued inflationary pressures. With this decision, policy interest rates of the Central Bank have been reduced by 150 basis points thus far in 2020, in addition to the other measures taken to ease monetary conditions in the market.
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The Central Bank of Sri Lanka Further Reduces Policy Rates to Support Economic Activity
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The Central Bank of Sri Lanka Extends the Deadlines to Facilitate Covid-19 Affected Businesses and Individuals
Considering the difficulties faced by some customers of financial institutions affected by the COVID-19 pandemic to obtain certain relief measures, the Central Bank of Sri Lanka has extended the deadline (30.04.2020) for submitting requests for debt moratoriums and 4% per annum refinancing facility for two months working capital, until 15 May 2020. Further, where the validity period of cheques valued less than Rs.500,000 has expired, the banks are required to consider them as valid until 15 May 2020. These extensions were effected through the Circular No. 06 of 2020 dated 28.04.2020.
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CCPI based Inflation decreased in April 2020
Headline inflation as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100)1 declined to 5.2 per cent in April 2020 from 5.4 per cent in March 2020. This was solely driven by the statistical effect of the high base prevailed in April 2019. Meanwhile, Food inflation (Y-o-Y) recorded at 13.2 per cent in April 2020 and Non-food inflation (Y-o-Y) declined to 2.1 per cent in April 2020 from 2.5 per cent in March 2020.
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The Central Bank of Sri Lanka Releases its Annual Report for the Year 2019
In terms of Section 35 of the Monetary Law Act No. 58 of 1949, the seventieth Annual Report of the Monetary Board of the Central Bank of Sri Lanka was presented to Hon. Mahinda Rajapaksa, the Prime Minister and the Minister of Finance, Economic and Policy Development, by Deshamanya Professor W.D.Lakshman, the Governor of the Central Bank of Sri Lanka.
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The Central Bank of Sri Lanka Imposes Maximum Interest Rates on Pawning Advances of Licensed Banks
The Central Bank of Sri Lanka observes that the current interest rates charged by licensed banks on pawning advances range from 12% - 17.5% per annum. Considering the necessity to provide relief to low income individuals who are pawning gold jewellery to meet their short-term financing needs due to the adverse economic situation resulting from the COVID-19 outbreak, the Monetary Board of the Central Bank of Sri Lanka has decided to impose maximum interest rates on pawning advances of licensed banks.
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Withdrawal of Primary Dealership by Union Bank of Colombo PLC
The general public is hereby informed that having considered the request made by the Union Bank of Colombo PLC (UBC), the Monetary Board of the Central Bank of Sri Lanka has granted approval for UBC to cease its operations as a Primary Dealer with effect from 01 May 2020. UBC will continue to function as a Dealer Direct Participant in the LankaSettle system and transact in scripless government securities on behalf of its customers and maintain its customer accounts in the LankaSecure system.
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NCPI based Inflation decreased in March 2020
Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) decreased to 7.0 per cent in March 2020 from 8.1 per cent in February 2020. This was driven by monthly decrease of prices of the items in the Food category. Accordingly, Food inflation (Y-o-Y) declined to 14.1 per cent in March 2020 from 16.3 per cent in February 2020. Meanwhile, Non-food inflation (Y-o-Y) recorded at 1.8 per cent in March 2020.
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Remittance of Funds to Sri Lankans Abroad to Pursue Studies and on Short Term Visits, to Meet Their Expenses
The Central Bank of Sri Lanka (CBSL) is aware that some Sri Lankans who have gone abroad, for short visits for leisure and holidays, meet relatives and friends, pilgrimage, business purposes, training, seminars and conferences, medical treatments, sports, recreational and cultural activities, etc., and on student or equivalent visas, are stranded abroad amidst the prevailing global pandemic situation and that their families in Sri Lanka are keen to send money to meet living expenses/up keep of such persons in overseas. In this regard, CBSL wishes to make the following clarifications.
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Sri Lanka Purchasing Managers’ Index - March 2020
Manufacturing activities significantly contracted due to adverse impacts of the COVID-19 pandemic. PMI recorded the all-time low index value of 30.0 in March 2020 with a decline of 23.6 index points from February 2020. The decline of manufacturing PMI was mainly driven by the significant contraction of Production and New Orders sub-indices of PMI reflecting the significance of the COVID-19 pandemic to Sri Lankan manufacturing sector.
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The Central Bank of Sri Lanka Reduces the Bank Rate
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 15 April 2020, having observed the cumulative reduction of the key policy interest rates of the Central Bank, namely the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), by 200 basis points each since 31 May 2019, decided to allow the Bank Rate to automatically adjust in line with the SLFR, with a margin of +300 basis points.