Central Bank of Sri Lanka: No Further Change

June 13, 2012

Two interest rate hikes of 50 basis points and 25 bps were implemented this year by monetary authorities in February and April, but the latest review resulted in no further changes of the 9.75% reverse repo or 7.75% repo rate.  From a high in 2007 of 10.5%, the repo rate had been cut to 7.0% by January 2011.  The tightenings earlier this year were intended to slow import growth and domestic credit expansion, and are indeed doing that.  A statement released by the central bank today stated “the Monetary Board is satisfied that the policy measures adopted thus far are yielding the desired results in the monetary and external sectors to ensure the long term growth and stability of the economy. Accordingly, the Monetary Board is of the view that the current monetary policy stance of the Central Bank is appropriate and should be maintained.”  Somewhat slower but decent economic growth is projected for coming quarters, and inflation remains high at 7.0%.  The rupee seems to be stabilizing after falling over 15% over the past year.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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