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Sri Lanka’s central bank has raised its key interest rates to 14.50% and 15.50% in an attempt to curb inflation This has exacerbated the country’s economic woes.
The recent price hike is a heavy blow, especially for the poor and vulnerable in the South Asian country, as they are going through the worst economic crisis in their country’s memory, and are suffering from severe shortages of necessities such as food, fuel, gas and medicine. fight shortages.
The central bank says it has raised standing deposit facility The rate charged to commercial banks and the standing lending rate are 100 basis points, 14.50% and 15.50%, respectively.
The bank said further monetary policy tightening would be needed to curb inflation across the board, which rose to nearly 55% in June.
“Our priority is to bring inflation down to a reasonable level as soon as possible. The sooner the better,” said central bank governor Nandalar Verasinghe. He said inflation could soar to 70%.
Prices of most essentials have tripled in recent months, with most people struggling to cover their basic needs.
About 70 percent of Sri Lankan households surveyed by UNICEF in May reported that they had reduced food consumption. Many families rely on government rice relief and charitable donations.
Sri Lanka’s economy is estimated to contract by 1.6% in the first half of 2022 from a year earlier, the central bank said. Fuel and electricity shortages have dampened economic activity in recent months.
Sri Lanka has closed schools for weeks due to severe fuel shortages, while the government has asked state employees other than essential service workers to work from home.
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