Central Bank Holds on to interest Rates

 

 

 

 

images (68) Sri Lanka’s Central Bank has decided to maintain current policy interest rates as the Monetary Board was of the view that the current monetary policy stance is appropriate, the Central Bank said today in its monetary policy review for May.

Accordingly, the Monetary Board has decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 percent and 7.50 percent, respectively.

Following the reduction in policy rates of the Central Bank in April 2015, market interest rates have adjusted downwards as expected and credit obtained by the private sector from commercial banks increased by 13.9 percent in March 2015 on a year-on-year basis.

Inflation, as measured by the year-on-year change in the Colombo Consumers’ Price Index (CCPI), remained at 0.1 percent in April 2015 unchanged from the previous month.

With improved domestic supply conditions and subdued prices of key commodities in the international market, inflation is expected to remain at low levels in the months ahead.

The recent currency swap agreement with the Reserve Bank of India amounting to US$ 400 million has strengthened official reserves of the country, the Bank said.

The realization of expected capital inflows in the period ahead and sustained regular inflows in the form of earnings from the export of goods and services, including tourism and workers’ remittances would improve the balance of payments during the year.

So far in 2015, the Sri Lankan rupee has depreciated against the US dollar by around 2.0 percent.

In this background, the Monetary Board has decided to keep the policy rates unchan

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