Sri Lanka holds rates as crisis-hit economy banks on govt reforms, IMF bailout
Policy 'sufficiently tight' to achieve disinflation path - CBSL
Reducing inflation remains priority for cenbank, says Governor
Expect quick progress on talks with creditors, investors - Gov
(Updates with quotes from governor's press conference)
By Uditha Jayasinghe and Swati Bhat
COLOMBO, Oct 6 (Reuters) - Sri Lanka's central bank held policy rates steady on Thursday, saying monetary conditions remain "sufficiently tight" after a massive rate-hike campaign earlier in the year as the crisis-hit nation grapples with red-hot inflation and shortage of dollars.
As widely expected, the Standing Lending Facility LKSLFR=ECI rate was held steady at 15.50% while the Standing Deposit Facility Rate LKSDFR=ECI was kept unchanged at 14.50%.
The South Asian island of 22 million people is battling its worst economic strife since independence from Britain in 1948, as a debt crisis led to an acute dollar shortage to pay for essential imports of food, fuel and medicine, a plunge in the rupee currency and runaway inflation.
Nine out of 14 economists and analysts polled by Reuters had forecast rates to remain unchanged, after the Central Bank of Sri Lanka's (CBSL) aggressive tightening campaign saw rates raised by a total 950 basis points so far in 2022.
"Monetary conditions remain sufficiently tight to achieve the envisaged disinflation path in the period ahead," CBSL said in its statement.
"The contractionary fiscal policies would complement the effects of tight monetary policy measures already in place, helping to mitigate any build-up of aggregate demand pressures, thereby anchoring inflation expectations and bringing down headline inflation to the targeted level of 4-6% over the medium term," they added.
Governor P. Nandalal Weerasinghe said the bank needs to keep rates high to bring down inflation, adding prices are expected to slow in December and January.
"The biggest challenge for the economy is inflation, businesses are struggling because input costs have risen steeply," he said.
Inflation remains uncomfortably high, hitting a record of 68.9% in September year-on-year with food inflation up 93.7%, exacerbated by the rupee currency's dive and a global surge in commodity prices.
"The key factor ahead is the 2023 budget and tax proposals which will support demand pressure, but also impact growth momentum to some extent," said Lakshini Fernando, a senior economist at investment firm Asia Securities.
Sri Lanka's economy is in a deep slump, shrinking an annual 8.4% in the June quarter in one of the steepest quarterly declines amid fertiliser and fuel shortages. The central bank is predicting an 8.7% GDP contraction for 2022.
Earlier this year, Sri Lanka defaulted on its foreign debt for the first time in history.
Fernando said the focus would be on the policies the government announces to bring down debt to sustainable levels, a key criteria for securing a bailout package from the International Monetary Fund.
"We know there are a number of tax measures coming up in the upcoming budget, but with real consumer spending already impacted with high inflation, further tax increases will dampen economic momentum to some extent," Fernando added.
Sri Lanka expects the IMF board to approve a $2.9 billion loan by year-end, officials from the country's central bank told investors during a virtual presentation in late September, sources participating in the event said.
Weerasinghe reiterated the IMF board approval for bailout funds could come in as early as December.
"Sri Lanka is expecting to get financial assurances from creditors by November and if so we can get a board level agreement from the IMF in December. If financing assurances are delayed, then the IMF programme could also be delayed," he said.
Sri Lanka Cenbank's Key Lending and Deposit Rates Link
Reporting by Uditha Jayasinghe and Swati Bhat
Editing by Shri Navaratnam
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.