Sri Lanka Holds Rates as US-Iran War Clouds Economic Outlook

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Or sign-in if you have an account.remdsbfxg1e{dui)384{rva1_media_dl_1.png Bloomberg(Bloomberg) — Sri Lanka’s central bank kept its benchmark interest rate unchanged, balancing the need to bring inflation back to target while supporting economic growth as renewed conflict between the US and Iran clouds the global outlook.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe Central Bank of Sri Lanka kept its overnight policy rate unchanged at 8.75% on Wednesday, matching the expectations of all 10 economists surveyed by Bloomberg.The decision underscores policymakers’ cautious stance even as consumer prices accelerated to a three-year high in June, exceeding the central bank’s 5% target for a third consecutive month. 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Please try againIn spite of the near-term uptick in price gains, “inflation expectations remain well-anchored” over the medium term, the bank said in a statement. “Although the acceleration of headline inflation is largely supply-driven, demand conditions in the economy have also strengthened.”However, together with other policy measures, including a full percentage point rate hike in May, the central bank expects credit growth as well as demand pressures to moderate, going forward, it said.Renewed tensions in the Middle East are also likely to dampen global prospects with potential spillovers to the Sri Lankan economy “through multiple channels,” it added.Escalating tensions between the US and Iran have disrupted shipping through the Strait of Hormuz, a vital corridor for global oil trade, reducing vessel traffic and raising concerns over energy supplies. Any prolonged disruption could push up oil prices, raising Sri Lanka’s import bill and inflation.The International Monetary Fund warned last month that the Middle East conflict posed risks to Sri Lanka’s economic outlook, highlighting the country’s vulnerability to higher energy costs. Authorities have also maintained fuel rationing to curb demand and keep prices in check. The central bank “stands ready to take appropriate measures to ensure that inflation stabilises around the 5% target,” it said, “while supporting the economy to reach its potential over the medium term.”—With assistance from Shinjini Datta, Asantha Sirimanne and Devidutta Tripathy.(Updates with comments from central bank.)This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.