As inflation spikes throughout the
Sri-Lankan economy, the central bank has responded by increasing the interest
rate from 5.5% to 6.5%.
This tightening of monetary policy follows
three consecutive months of double-digit inflation, with the official rate
measured at 15.1% in February. Sri-Lankan consumers are particularly feeling
the pinch at the grocery store with food inflation reaching 25.7% in the last
month.
This recent hike in inflation has been attributed to adverse global economic conditions, with surging energy and commodity prices identified as the mail culprit.
Q1. What is meant by the expression ‘tightening of monetary policy’?
Q2. Explain why increasing the interest rate is used as a measure to decrease inflation.
Q3. Analyse the impact of surging inflation on Sri-Lankan consumers.
Q4. Explain one other method the government could use to try and dampen the inflationary pressure in Sri-Lanka.
Click here for the source article
In an unprecedented move today, the US federal reserve, which controls and coordinates American monetary policy, has announced a cocktail of measures to combat the economic fallout from the coronavirus which utilises almost every weapon […]
In the UK, interest rates are set by the Monetary Policy Committee (MPC), a group of nine central bankers who meet eight times a year to decide on any changes to the official interest rate. […]
Copyright © 2024 | MH Magazine WordPress Theme by MH Themes