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People walk past the main entrance of the Sri Lanka's Central Bank in Colombo, Sri Lanka March 24, 2017. The Central Bank of Sri Lanka (CBSL) lowered the standing deposit facility rate and the standing lending facility rate by 100 basis points each to 10% and 11%, respectively, it said in a statement. Sri Lanka, however, failed to reach an agreement with the IMF in its first review of the bailout package last month, due to a potential shortfall in government revenue. Even with policy loosening Sri Lanka could find it difficult to post (a 2% contraction) this year," said Udeeshan Jonas, chief strategist at equity research firm CAL Group. The central bank reiterated that it would like to see market interest rates come down further.

Persons: Dinuka, CBSL, Udeeshan Jonas, Thilina Panduwawala, Uditha Jayasinghe, Swati Bhat, Sam Holmes, Sudipto Ganguly Organizations: Sri, Central Bank, REUTERS, Rights, International Monetary Fund, Central Bank of Sri, IMF, CAL, Frontier Research, Bank Locations: Colombo, Sri Lanka, Lanka's, Central Bank of Sri Lanka, Sri, Lanka

The Central Bank of Sri Lanka (CBSL) cut its standing deposit facility rate (SDFR) and standing lending facility rate (SLFR) to 11% and 12%, respectively, from 13% and 14% previously, in line with expectations. The 200 basis point cut follows a 250 bps cut at its last policy meeting in June. The central bank raised rates by a record 950 bps last year to tame inflation and by 100 bps on March 3. Sri Lanka's key inflation index peaked at 70% year-on-year in September and has come down gradually. Analysts expect more rate cuts in coming months to aid economic recovery and reduce borrowing costs for corporates and the government.

Persons: Gotabaya Rajapaksa, Ranil Wickremesinghe, CBSL, Sri, Dimantha Mathew, Thilina Panduwawala, Sudipto Ganguly, Raju Gopalakrishnan Organizations: International Monetary Fund, Central Bank of Sri, First, corporates, Frontier Research, Thomson Locations: COLOMBO, Sri Lanka, Central Bank of Sri Lanka

The bank raised its standing deposit facility rate and standing lending facility rate by 100 basis points each to 15.50% and 16.50%, respectively, it said in a statement. The country is awaiting approval of a $2.9 billion IMF bailout package as it endures its worst financial crisis since independence from Britain in 1948. The central bank raised rates by a record 950 basis points last year to tame inflation and then kept them steady until Friday's 100 basis point increase. "There have been some differences between the CBSL and IMF staff on the inflation outlook," the Central Bank of Sri Lanka (CBSL) said in its statement. But depends on whether the market reads this as positive for getting IMF (bailout) in March."

COLOMBO, Nov 24 (Reuters) - Sri Lanka's central bank on Thursday threatened administrative intervention to control high market interest rates that it regarded as out of line with the inflation outlook. Any such action, interpreted by economists as meaning it might push market rates down, would lower the government's high borrowing costs. However, it was unclear how the central bank could force investors to support public finances at lower rates than they expected. "If an appropriate downward adjustment in the market interest rates would not take place in line with the envisaged disinflation path, the central bank will be compelled to impose administrative measures to prevent any undue movements in market interest rates," CBSL said in a statement. "The statement was quite aggressive in saying they are prepared to use non-policy rate tools to nudge market rates, including deposit rates, lower," he added.

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