Poll: Sri Lanka market evenly divided on possible US rate change

Nov 19, 2015 (LBO) – Sri Lanka market participants are evenly divided on whether the U.S. will hike interest rates or not this year, with half the participants polled by Lanka Business Online saying they expect no change.

Out of 14 market participants polled by Lanka Business Online, seven said they expect around a 25 basis point hike this year, and seven said they expect no change this year.

Some traders said the hike would be a cautious one, given that the recent attack on Paris has raised tensions in international markets.

A U.S. rate hike this year would be the first in nine years, ending an extended period of monetary policy easing.

U.S. policy direction is seen as significant for emerging markets such as Sri Lanka which may consider following suit, although Finance Minister Ravi Karunanayake says he prefers a low interest rate environment and does not expect this to impact the currency.

According to minutes of an FOMC meeting on Oct 27-28 released on Wednesday, Fed policy makers who are concerned about risks to the labor market, current low inflation, weak global growth and want to delay an interest rate hike found themselves in a minority.

In the statement following the October meeting, the Fed said an interest-rate increase would be considered at their “next meeting,” scheduled for Dec. 15-16.