Sri Lanka in third rate cut after Easter bombings

Sri Lanka in third rate cut after Easter bombings

Sri Lanka's central bank Thursday announced a 50 basis point cut in its benchmark interest rates, the third reduction since the Easter bombings that killed at least 269 people.

The Central Bank of Sri Lanka (CBSL) said it was reducing its lending rate from 8.0 percent to 7.5 percent while the deposit rate was also cut by 50 basis points to 6.5 percent.

It said the two previous rates cuts of 50 basis points each since the April 21 suicide bombings against three churches and three luxury hotels had not adequately brought down market interest rates for consumers.

The Monetary Board of the CBSL "was of the view that it is essential that market lending rates reduce further in order to support the envisaged pickup in credit growth and economic activity," the bank said in a statement.

It said tourism had picked up after the devastating Easter bombings, but the number of tourist arrivals and income from the sector was below 2018 levels.

Sri Lanka's new government which came to power in November has also initiated several schemes to freeze repayments on bank loans of local companies affected by the downturn following the attacks.

The bank said domestic economic activity remained subdued last year, but it expected a revival after a raft of stimulus measures announced by the government to help private enterprises.

Sri Lanka's growth picked up to 2.7 percent in the third quarter of last year compared to 1.5 percent in the previous quarter, but down from 3.5 percent in the third quarter of 2018.

Sri Lanka expects growth of about 3.0 to 3.5 percent in calendar 2020.

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