Friday, August 19, 2011

Sri Lankan Central Bank Holds Repo Rate at 7.00%

The Central Bank of Sri Lanka maintained its benchmark repurchase rate unchanged at 7.00%, and also held the reverse repurchase rate at 8.50%, and the Statutory Reserve Ratio at 8%.  The Bank said: "with the continuous improvements in the supply of most food items, inflation is expected to moderate in the coming months," and further noted that "the central bank will continue to closely monitor the growth of monetary aggregates and will implement appropriate measures if demand-side pressures in the economy increase."

Sri Lanka's central bank also held its monetary policy stance unchanged during its July meeting this year.  Sri Lanka reported an annual headline inflation rate of 7.5% in July, compared to 7.1% in June, and 8.2% in May.  The Bank noted that in H1 Sri Lanka received US$413 million in foreign direct investment (FDI) inflows, which compares to the country's target of US$1 billion in FDI in 2011.  Sri Lanka is aiming for 8.5% GDP growth in 2011, after its economy expanded 8% in 2010, meanwhile inflation is expected to slow to 6% by the end of 2011.

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