The Central Bank of Sri Lanka left its benchmark repurchase rate unchanged at 7.00%, and also kept the reverse repurchase rate at 8.50%, and the Statutory Reserve Ratio at 8%. The Bank said: "Inflation on a year-on-year basis is expected to continue to moderate during the remainder of 2011, with the continuous improvements in domestic supply conditions supported by the high growth momentum of the economy as well as the expected moderation of international commodity prices." The Bank also noted "the growth of money supply is expected to moderate in the period ahead given the decline in excess liquidity in the money market"
Sri Lanka's central bank also kept its monetary policy settings unchanged at its September meeting this year, while the Bank last cut its key interest rates in January this year. Sri Lanka reported an annual headline inflation rate of 6.4% in September, down from 7% in August, 7.5% in July, 7.1% in June, and 8.2% in May.
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. Sri Lanka reported 8.2% annual GDP growth in the second quarter (7.9% in Q1).
The Bank said broad money supply (M2) grew 20.6% year on year in August, while credit to the private sector grew 34.1%. The Sri Lankan Rupee (LKR) last traded around 110 against the US dollar. The Central Bank of Sri Lanka next meets on the 8th of November.
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