Central Bank Rate Cut in Sri Lanka

December 12, 2012

The intended impact of rate hikes of 50 basis points last February and another 25 bps in April have been largely reaped.  Money and credit growth are slowing.  Real economic growth, although ample, has moderated, and the trade deficit has narrowed.  In a newly released statement, officials defended today’s reversal of last April’s tightening.   “Having assessed the developments and outlook discussed above and taking into consideration the expected moderation in inflation towards the second quarter of 2013 and the need to support the economy to realize its growth potential in 2013 and beyond, the Monetary Board at its meeting held on 11 December 2012 was of the view that the current developments provide some space to ease monetary policy while maintaining overall macroeconomic stability.”  So the reverse repo rate and repo rate now drop to 9.5% and 7.5%.

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



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