Central Bank of Sri Lanka

February 17, 2014

Monetary officials announced no further changes now in Sri Lanka’s 8.0% reverse repo (lending) rate of 6.5% repo rate.  The lending rate had been cut by 50 basis points at the prior policy review on January 2, and both rates previously were reduced by 25 bps in December 2012, 50 bps in May 2013, and another 50 bps in October 2013.  A statement from officials notes

  • Improved growth.
  • A lagged drop in market interest rates following compression of the policy rate corridor at the start of this year.
  • A desirable pick-up in credit demand.
  • Single-digit inflation for the past five years.  In January, the total and core rate of CPI inflation was at 4.4% and 3.5%.
  • A sound balance of payments characterized by rupee stability, a favorable international reserve position, and recent continuing net inflows into the Sri Lankan bond and stock markets.  This contrasts with setbacks in such regard in several other emerging markets.
  • Growth benefits that are likely to be reaped from an expansion of Sri Lankan productive capacity.

Officials concluded that their current monetary stance remains “appropriate.”

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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