Monetary expansion to be kept at 15% to spur over 6% growth

Policy makers hope to rein in monetary expansion to 15 percent in 2005, down from a high of 19.6 percent at the end of 2004. Policy makers hope to rein in monetary expansion to 15 percent in 2005, down from a high of 19.6 percent at the end of 2004. The Central Bank on Friday said monetary expansion would be reined in to bring price stability in the medium term, with a cut back on credit to the government and the public sector.

The 15 percent level is 0.5 percent above pre-tsunami estimates, with forecast for 2008 at 12.5 percent – marked 1 percent higher after the December Tsunami’s devastation.

The constraint is however expected to help spur economic growth rates of above 6 percent, while reducing the inflation rate gradually bust consistently from 11 percent in early 2005 to 5 percent by 2008.

The bank also revised its GDP growth estimates for 2005 from 6 percent before the tsunami to 5.3 percent.

The downward revision accounts for the damages sustained by the tourism and fisheries sectors and the cost of rebuilding.

The anticipated increase in building activity is expected to compensate to some