The Central Bank of Sri Lanka lowered its benchmark interest rate by 50 bps to 7 percent during its August meeting. Policymakers said that the decision aims to continue supporting economic activity in the context of low inflation. The Committee added that domestic economic growth is expected to recover gradually towards its potential in the medium term, still domestic and global headwinds are likely to delay the recovery. Policymakers noted that the annual inflation rate fell to 3.3 percent in July from 3.8 percent in June, partly driven by subdued food prices and it is projected to remain around the lower bound of the target range (4-6 percent) during the rest of 2019. The central bank also slashed the standing lending facility rate (SLFR) by 50 basis points to 8 percent. Interest Rate in Sri Lanka averaged 7.82 percent from 2003 until 2019, 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 7.50 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 6.50 in 12 months time. In the long-term, the Sri Lanka Interest Rate is projected to trend around 6.00 percent in 2020, according to our econometric models.