Sri Lanka central bank holds rates on tariff uncertainty

 Sri Lanka held its benchmark interest rate steady at 7.75% on Wednesday, but the central bank chief said further easing was possible as the island nation awaits the outcome of tariff talks with the U.S. The decision was widely expected, with most analysts in a Reuters poll predicting a hold amid stable inflation and a steady economic recovery. The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. "There may be further room for easing but we will closely monitor developments and see if it is warranted," Central Bank Governor P. Weerasinghe told reporters at a post-policy briefing in Colombo. Advertisement · Scroll to continue "We feel this monetary policy is appropriate and will steer inflation towards our 5% target." Supported by a $2.9 billion programme from the International Monetary Fund, the country is gradually recovering from its worst financial crisis in decades, triggered by a record dollar shortage three years ago. The inflation rate was minus 0.6% in June but the central bank expects it to turn positive this quarter, ending almost a year of deflation. The Central Bank of Sri Lanka (CBSL) had trimmed its benchmark interest rate by 25 basis points in May in a surprise move to support growth. The economy expanded 5% in 2024, and Weerasinghe said growth will be above 3% this year.