Tuesday, 26 September 2017 - 15:02
Policy interest rates to remain unchanged, gross reserves rise


Monetary Board of Sri Lanka has decided that the current monetary policy stance is appropriate and decided to maintain the policy interest rates of the Central Bank of Sri Lanka unchanged.

In a media communique, the CBSL said the decision was taken considering developments and outlook in the domestic and international macroeconomic environment.

The Central Bank also said although disruptions to near term growth prospects continue, forward looking indicators show improved medium term prospects, which are likely to be realized with the envisaged structural reforms and expected inflows of foreign investments.

The growth of credit extended to the private sector by commercial banks has shown a gradual deceleration since July 2016, responding to the prevailing high nominal and real interest rates in the domestic market.

Data showed that so far during the year, net credit extended to the government (NCG) by the Central Bank has declined sharply, although NCG by the banking sector has been high.

A moderate expansion of credit to public corporations has also been observed during the year.

Meanwhile, deposit and lending rates appear to have stabilized, partly in response to the recent decline in yields on government securities.

Amidst these developments, the Central Bank cumulative purchases of foreign exchange from the domestic market exceeded 1.1 billion dollars on a net basis, and gross official reserves improved to around US dollars 7.3 billion by 21st of September.

Gross reserves stood at 6 billion dollars at end 2016. 

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