The Central Bank of Sri Lanka kept its benchmark repurchase rate steady at 7.00%, and also held the reverse repurchase rate at 8.50%, and the Statutory Reserve Ratio at 8%. The Bank said: "While supply side improvements, particularly with respect to agricultural produce, have helped bring down domestic prices, the expected favourable performance of the domestic agricultural sector in the forthcoming year coupled with the ongoing improvements to infrastructure includingtransportation, will help mute inflationary pressures in the period ahead."
Sri Lanka's central bank also kept its monetary policy settings unchanged at its November 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 4.7% in November, down from 6.4% in September, 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 19.8% year on year in October, while credit to the private sector grew 34.1%. The Sri Lankan Rupee (LKR) last traded around 114 against the US dollar. The Central Bank of Sri Lanka next meets on the 13th of January 2012.