Sri Lanka holds policy rates, amid stronger credit growth

Nov 16, 2010 (LBO) – Sri Lanka’s central bank said it was holding its policy rates steady with credit growth picking up to 15.5 percent in September 2010 from a year earlier and inflation despite an increase in commodity prices. “However, broad money growth remains compatible with the targeted path, with year-on-year growth in broad money hovering around 13 to 14 per cent during the quarter ending September.”

Reserve Currency Inflation

By October Sri Lanka’s consumer price inflation has risen to 6.6 percent, from a year earlier.

“Supply-side constraints, both internationally and domestically, which drove up prices of wheat and wheat based products, coconuts, and a few other commodities, contributed mainly to the increases in inflation in recent months,” the Central Bank said.

“Nevertheless, inflation is expected to remain subdued at mid-single digits, on an annual average basis, by end year.”

Globally traded commodities prices of which are largely determined by the action of reserve currency central banks like the Federal Reserve (whose currency is used to denominate them) have been rising amid loose monetary policy.

The international energy agency warned that renewed Federal Reserve money