Rising inflation and falling reserves is likely to put an end to Sri Lankas eight month long honeymoon with low interest rates.
The Central Bank hinted that it is unlikely to keep down short-term interest rates next month, as a declining trend in inflation bottoms out keeping in line with rising consumer prices.rn
rnThe bank on Wednesday kept its key discount rates intact, though a weak rupee and rising global oil prices continued to trouble the economy.rn
rnThe repurchase rate stayed steady at 7.0 percent, while the reverse repurchase rate was kept at 8.50 percent following its weekly Monetary Policy meeting late Tuesday.rn
rnBut Deputy Governor W A Wijewardene said they will re-visit their decision during the Monetary Policy review meeting on August 13.rn
rnPoint-to-point inflation measured by the Sri Lanka Consumers Price Index rose from 4.2 percent to 4.7 percent in May.rn
rn”Consumer price inflation is expected to be marginally higher than initially projected due to the adjustment of som