CBSL expected to maintain the policy rates at its current levels

First Capital Research (FCR) sees a high probability of the Central Bank of Sri Lanka (CBSL) maintaining policy rates at the current level allowing further strengthening of key economic indicators, along with a lower probability for a dovish stance to relax its policy rates in order to prevent a major economic downturn as well as to signal the market participants a clear direction on the way ahead.

As a result, FCR assigned a major probability of 65% to maintain the rates while also assigning a lower probability of 35% towards a monetary relaxation.

Moreover, considering the persistent negative liquidity in the banking system, FCR assigned a lower probability of 20% for a cut in the SRR while placing the majority of bets on the SRR to remain unchanged.