🇱🇰 Central Bank of Sri Lanka introduces a Single Policy Rate System

⭕ Starting Nov 27, 2024, the Overnight Policy Rate (OPR) becomes the main interest rate used by the Central Bank to guide lending, borrowing, and inflation control.

⭕ The new OPR (set at 8%) will directly guide the interest rates at which banks lend to each other in the short term.

⭕ OPR set at 8%, according to @CBSL is a 50bps policy rate cut with respect to previous policy rates.

Previously, two rates were used:

⭕ Standing Deposit Facility Rate (SDFR): The rate banks earned for depositing money at the Central Bank.

⭕ Standing Lending Facility Rate (SLFR): The rate banks paid when borrowing from the Central Bank

⭕ Now, these rates (SDFR = 7.5%, SLFR = 8.5%) will only serve as limits for short-term interbank lending and borrowing. They will no longer be considered "policy rates."

⭕ policy rate cuts are expected to reduce both deposit and lending rates offered by banks, creating favorable conditions to stimulate economy.

#SriLanka 🇱🇰 #Economy