Friday, November 18, 2011

Central Bank of Sri Lanka Holds Rate at 7.00%

The Central Bank of Sri Lanka held 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: "The outlook for Sri Lanka's economy remains positive with the economy continuing along the high growth trajectory", and "even though inflation and the inflation outlook remain benign, the Monetary Board is of the view that a change to the existing monetary policy stance is not warranted.

Sri Lanka's central bank also kept its monetary policy settings unchanged at its October 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 20th of December.

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