Sri Lanka Central Bank maintains policy interest rates

Sri Lanka's Central Bank has decided to maintain the current policy interest rates following its monthly monetary review meeting held Monday.
Accordingly, the Repurchase rate and the Reverse Repurchase rate of the Central Bank would remain at 7.25 percent and 9.00 percent, respectively.

Announcing its decision today in the Monetary Policy Review for November, the Central Bank said Sri Lanka's recent domestic macroeconomic trends have been encouraging.

The Central Bank said in a statement that economic activity has expanded significantly in real terms in the first two quarters of 2010.

"External trade has recovered, and earnings from exports have recorded an increase for the first three quarters of the year," it said.

The Central Bank said the international reserves of the country still continued to be at above targeted levels and expected the situation to continue into the forthcoming period.

According to the monetary authority credit flows to the private sector have risen this year, with the year-on-year increase in credit granted by commercial banks to the private sector reaching 15.5 percent by September.

Although inflation increased in October to a 6.6 percent from a 5.4 percent in September due to price hikes in wheat, coconut and other commodities, the Bank was optimistic that the inflation would remain subdued at mid-single digits, on an annual average basis, by year end.

Considering all the positive developments, the Monetary Board has decided to keep the policy interest rates unchanged, the Central Bank said.