Sovereign Analysis /
Sri Lanka

Sri Lanka rate hike is symbolic as fiscal dominance fuels money printing

  • The CBSL hiked by 100bps to 15.5% but, with inflation at 55% yoy, the real policy rate is still steeply negative

  • CBSL money printing reached nearly 5% of GDP in H1 to meet the government's spending needs, which will add fuel to fire

  • Hike is symbolic as primary market T-bill yields have already exceeded 28%, but may still aide IMF discussions

Sri Lanka rate hike is symbolic as fiscal dominance fuels money printing
Patrick Curran
Tellimer Research
7 July 2022
Published byTellimer Research

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