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Sri Lanka: rate hikes not enough to restore stability

The central bank in Sri Lanka (CBSL) today raised its benchmark lending facility rate by a further 100bp (to 15.5%), and with inflation running at over 50%, more tightening seems likely. However, rate hikes on their own will not be enough to restore economic stability. An IMF deal is needed. While the two sides appear committed to reaching an agreement, big differences remain.

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