Sri Lanka Raised Interest Rates

Sri Lanka Raised Interest Rates

Running out of money Sri Lanka raised interest rates one percentage point, the second massive increase in the last three months. The central bank of Sri Lanka has already warned about the recession and 80% inflation as well.

After the release of last month’s inflation data which indicates inflation at a record high of 54.6%, the Central Bank of Sri Lanka increased its benchmark deposit to 14.5% and lending rates to 15.5%.

According to the officials, the target of increasing interest rates is to control the soaring prices which are forecasted to reach 80% by the year-end.

The shortage of fuel and food, along with massive electricity breakouts, has already led to months of widespread protests against President Gotabaya Rajapaksa.  

Prime Minister Ranil Wickremesinghe said in the parliament there is a possibility of a 7% economy shrink. 

All of the economic activities are badly affected by fuel and electricity shortages, the central bank said.

However, all of the schools and offices have been ordered to remain shut in a bid to lessen the consumption of energy.

According to the latest updates, Sri Lanka is out of petrol and diesel, and fresh supplies will take at least two weeks to reach Sri Lanka.

The government of Sri Lanka is already negotiating a bailout with IMF as the country defaulted on its $51 billion foreign debt in April.   

Sri Lanka raised interest rates in order to cut inflation.