Sri Lanka Central Bank maintains policy interest rates

The Central Bank of Sri Lanka (CBSL) has decided to keep borrowing costs unchanged as market interest rates continued to adjust downwards in response to the recent monetary policy measures taken by the Central Bank
.Accordingly, the Repurchase rate and the Reverse Repurchase rate of the Central Bank would remain at 7.25 percent and 9.00 percent, respectively, the CBSL said in its monetary policy review for September today.

The Bank noted that in response to the improving credit conditions, credit flows to the private sector continue to increase and credit obtained by the private sector from commercial banks recorded an 8.9 percent increase.

In July 2010, credit disbursed by licensed commercial banks, licensed specialised banks, and registered finance companies together, saw a year-on-year increase of 9.9 percent.

The monetary authority expects the market lending rates to decline further and the credit flows to the private sector to increase in the future, to fully reflect the recent relaxation of its monetary policy.

The Bank says Sri Lanka's economy is expected to grow by 7.5 to 8.0 percent in 2010, following the GDP growth of 7.8 per cent in the first half of 2010.