For the second consecutive month Sri Lanka's inflation declined to 5.8 percent in April from a 6.3 percent in March 2010, the Central Bank reported today. However, the annual average inflation, increased marginally to 3.4 percent in April from 3.2 percent in March.
The reduction in inflation was attributed to the drop in commodity prices as, according to the Central Bank "price pressures in the economy have been dampened by improvements on the supply side."
The financial authority says the developments in the monetary sector have been encouraging.
According to the Central Bank, credit obtained by the private sector has begun to improve with a positive growth in March indicating the solidifying recovery in the economy.
"This development is attributable to the easing of monetary policy as well as improving financial conditions and the resulting downward adjustment in market interest rates," the Bank noted.
Considering the improving conditions, the Monetary Board, which met Wednesday (19), has decided to maintain the policy interest rates of the Central Bank unchanged.
Currently the benchmark interest rates are kept at a five-year low of 9.75 percent for the reverse repurchase rate and at 7.5 percent for the repurchase rate.
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