Colombo, Jun 1 (IANS): The Monetary Board of the Central Bank of Sri Lanka (CBSL) decided to reduce the Standing Deposit Facility Rate and the Standing Lending Facility Rate by 250 basis points to 13.00 per cent and 14.00 per cent, respectively, the CBSL said in a statement on Thursday.

The Board arrived at this decision with a view to easing monetary conditions in line with the faster-than-expected slowing of inflation, gradual dissipation of inflationary pressures and further anchoring of inflation expectations, Xinhua news agency reported citing the CBSL as saying.

The commencing of such monetary easing is expected to provide an impetus for the economy to rebound from the historic contraction of activity witnessed in 2022, while easing pressures in the financial markets, the bank said.

During the four months ending April 2023, the trade deficit decreased notably, compared to a year earlier, reflecting mainly the subdued import expenditure, which outweighed the impact of moderation of external demand for merchandise exports.

The downward adjustment in market interest rates will accelerate in line with the envisaged single-digit inflation, thereby supporting credit to the private sector and softening the pressures in the financial sector, the CBSL added.