Thursday, 03 August 2017 - 10:18
Central Bank’s policy interest rates unchanged


The Monetary Board has decided to maintain the policy interest rates of the Central Bank of Sri Lanka at their present levels.

They reached this decision yesterday.

In arriving at the decision, the Monetary Board had taken into consideration current and expected developments in the domestic and international macroeconomic environment and the need to maintain inflation at mid-single digit levels over the medium term.

The Central Bank said that the Sri Lankan economy is expected to record a modest recovery in the forthcoming quarters following the low growth witnessed in the first quarter of 2017.

The recovery of the agriculture related activities and the positive performance of the industry and services related activities together with the reinstatement of GSP+ facility are expected to contribute to economic growth.

The CBSL noted that the inflation is expected to ease further towards the end of 2017 and stabilize thereafter due to the tight monetary policy stance maintained since the end of 2015 and the dissipation of the ‘one-off’ impact of the tax structure on inflation.

Meanwhile, private sector credit that was growing at an elevated level during 2016 and early 2017, indicates clear signs of deceleration in recent months, although at a slow pace.

In view of high nominal and real interest rates prevailing in the market, it is expected that growth of monetary and credit aggregates would moderate further during the remainder of the year.

The recent decline in the yields on government securities is expected to gradually transmit to other market interest rates in the forthcoming period.

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