Sri Lanka Central Bank maintains policy interest rates as economic growth continues

Sept 16, Colombo: Sri Lanka’s Central Bank has decided to maintain the current policy interest rates following its monthly Monetary Board meeting held Thursday (15).

In the Monetary Policy Review released Friday the Bank said its Repurchase rate would remain at 7.00 percent while the Reverse Repurchase rate remains at 8.50 percent.

The Bank said that all key sectors of the economy have contributed positively to the economy and the growth momentum of the economy is continuing as evident by the leading economic indicators.

Inflation, as measured by the year-on-year change in the Colombo Consumers’ Price Index, declined to 7.0 percent in August 2011 from 7.5 percent in previous month, while core inflation decreased from 8.9 percent in July to 7.8 percent in August.

Domestic economic activity continues to expand at a commendable pace, supported by improved external and domestic demand, the Central Bank said in its statement.

Sri Lanka’s gross domestic product is estimated to have grown by around 8 percent in the first half of 2011, with both industry and services sectors recording impressive growth.

The contribution of the agriculture sector meanwhile has also been positive in the second quarter, following its contraction in the first quarter.

“The favourable outlook for domestic economic activity augurs well for domestic prices, going forward,” The Central Bank noted.

Considering the recent macroeconomic developments, the Monetary Board has decided to maintain the Banks policy interest rates at their current levels.

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