Sri Lankan Repo Rate Held Steady at 7.0% Despite Lower Inflation

November 16, 2011

Sri Lankan inflation dropped to 5.1% in October from 6.4% in September and a peak in mid-2008 of 28.2%.  Nonetheless, officials at the Central Bank of Sri Lanka voted to retain a 7.0% repo rate and an 8% reserve requirement after discussing the merits of easing.  The repo rate was last cut in January 2011 but 25 basis points.  There had been a single cut of 25 bps in 2010 and reductions totaling 100 bps in the second half of 2009.  A statement from the central bank justifies this month’s decision on the grounds of still-rapid credit and money growth, respectively at 34.1% and 20.7%.  Real economic growth meanwhile continues to power along at somewhat more than 8%.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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