COLOMBO, June 1 Reuters Sri Lanka39;s central bank cut its key interest rates by 250 basis points on Thursday amid easing inflationary pressures, signalling that the South Asian nation was emerging from a devastating financial crisis and ready to focus on growth.

The Central Bank of Sri Lanka CBSL cut its standing deposit facility rate and standing lending facility rate to 13 and 14, respectively, from 15.5 and 16.5 previously.

Most analysts had expected the bank to keep rates steady. The rates are now at their lowest since March 2022, at the start of the crisis.

Policy interest rates reduced in view of the faster deceleration of inflation, benign inflation outlook and the easing of BOP balance of payment pressures, thereby reinforcing the rebound of the economy, the CBSL said.

The rate cuts are expected to accelerate the normalisation of the interest rate structure, broadbase economic activity and ease pressures in financial markets helping steer the economy towards a rebound phase.

After the announcement, Sri Lanka39;s rupee currency rose to its highest since April 2022 at 289 to the dollar while three and sixmonth government treasury bills eased around 5 percentage points each to 1920. The benchmark Colombo Stock Exchange index rose 1.3 to lift away from fivemonth lows.

The rate cut comes after the key Colombo Consumer Price Index rose 25.2 on year in May from 35.3 in April, reducing some stress on the crisishit economy which had crumpled under soaring…