Rate cuts in Sri Lanka are premature

We believe today’s unexpected rate cut by the Central Bank of Sri Lanka (CBSL) is premature in light of the large external problems still facing the economy. Given the CBSL’s current dovish stance, we expect further rate cuts next year. However, the large trade deficit will remain a constraint on policymakers and could force the CBSL to reverse course before the end of 2013.

Subscriber content

Read this in full, free

Start a free trial and use one of your 10 free starter credits to unlock this piece.


Free. 10 articles. No card required.
By completing this form you are agreeing to our Terms and Conditions for the provision of a free trial of Capital Economics' services. We take your privacy seriously and will not share your details with others without your consent. By providing your details, including your email address, you are consenting to Capital Economics sending you macroeconomic commentary and analysis. You can unsubscribe at any time. See our Privacy Policy for more information.

Already a client or trialist? Log in to read this.