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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.

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.