The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 25 November 2020, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 4.50 per cent and 5.50 per cent, respectively. The Board arrived at this decision after carefully considering the macroeconomic conditions and expected developments on the domestic and global fronts. The Board, having noted the reduction in overall market lending rates so far during the year, stressed the need for a continued downward adjustment in lending rates to boost economic growth in the absence of demand driven inflationary pressures, particularly considering the significant levels of excess liquidity prevailing in the domestic money market. In order to support the economic revival, the Board decided to introduce maximum interest rates on mortgage backed housing loans for salaried workers, while lending targets for selected sectors of the economy will be introduced in the near future.

Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) decreased to 5.5 per cent in October 2020 from 6.4 per cent in September 2020. This was due to the statistical effect of the high base prevailed in October 2019. Meanwhile, Food inflation (Y-o-Y) decreased to 10.6 per cent in October 2020 from 12.7 per cent in September 2020, whereas Non-food inflation (Y-o-Y) increased marginally to 1.5 per cent in October 2020 from 1.4 per cent in September 2020.