Sri Lanka Cuts Lending Rate in IMF Rebuff as Inflation Eases

Sri Lanka’s central bank cut one key interest rate while holding another after inflation eased to the lowest level in about two years, ignoring advice from the International Monetary Fund to hold off on further easing, Bloomberg News reported. The Central Bank of Sri Lanka reduced the benchmark reverse repurchase rate, which it renamed the standing lending facility rate, by 50 basis points to 8 percent, Governor Ajith Nivard Cabraal said in an interview in Colombo on Dec. 31. It held the repurchase rate -- now known as the standing deposit facility rate -- at 6.5 percent to signal to commercial banks that lending rates alone need to fall, he said. The rate cut comes a month after the IMF advised the South Asian nation of 20 million people to allow time for earlier reductions to take effect before mulling further easing. Cabraal in October unexpectedly cut both key interest rates by 50 basis points to guard against the risk of a default amid a government shutdown in the U.S., its largest export market. Read more.