The Monetary Policy Board of the Central Bank of Sri Lanka convened on January 22, 2024, and opted to retain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) at their existing levels of 9.00 percent and 10.00 percent, respectively.

The decision followed a meticulous evaluation of both domestic and international macroeconomic trends with the overarching goal of sustaining inflation at the targeted rate of 5 percent over the medium term while facilitating the economy's realization of its full potential.

The Board acknowledged the recent impacts of taxation adjustments and supply-side dynamics, recognizing their potential to exert upward pressure on inflation in the short term. However, the Board concluded that these influences were unlikely to significantly alter the medium-term inflation outlook.

Furthermore, the Board took note of the space created by prior monetary policy easing measures and the decreased risk premia associated with government securities. This prompted a consideration for potential further reductions in market lending interest rates.

It was emphasized that any benefits derived from lowering market lending interest rates should promptly and effectively be transmitted to businesses and individuals by financial institutions. The Board emphasized the importance of ensuring that the envisaged advantages of reduced market lending rates contribute to fostering economic growth.