March 24, 2017 / 2:20 AM / 5 months ago

Sri Lanka c.bank raises rates to contain price pressures

COLOMBO, March 24 (Reuters) - Sri Lanka's central bank raised its benchmark interest rates by 25 basis points each on Friday for the first time in eight months, saying tightening of monetary policy was necessary to contain the build-up of adverse inflation expectations.

The central bank warned of the possible acceleration of demand side inflationary pressures through excessive monetary and credit expansion.

The Central Bank of Sri Lanka raised the standing deposit facility rate (SDFR) and the standing lending facility rate (SLFR) to 7.25 percent and 8.75 percent, respectively. (bit.ly/2oaPuGO)

It last raised its policy rates in July, keeping rates steady for months despite pressure on the fragile rupee and high credit growth.

A Reuters poll this week showed economists were split on their views. Eight out of 15 economists surveyed predicted the central bank would keep both rates unchanged.

However, the rest expected at least a 25-basis-point hike in one of the two policy rates. (Reporting by Shihar Aneez and Tanvi Mehta; Editing by Randy Fabi and Jacqueline Wong)

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