Sri Lanka keeps key policy rates steady, credit to private sector grows in April

June 29, 2015 (LBO) – Sri Lanka’s Central Bank has decided to maintain its standing deposit facility rate and the standing lending facility rate unchanged at 6.00 percent and 7.50 percent, respectively.

The Central Bank’s monetary board at its meeting held on 26 June 2015 has also decided to keep statutory reserve ratio stable at 6.00 percent.

Broad money supply has recorded a year on year growth of 13.9 percent in April 2015 and credit to the private sector in April 2015 was 15.2 percent, the central bank said.

“In absolute terms, credit extended to the private sector has been increasing by around 25 billion rupees on average per month up to April 2015 supporting continued expansion of economic activity.” the Bank said.

Inflation, as measured by the year on year change in the Colombo Consumers’ Price Index was 0.2 percent in May 2015 and remained below 1.0 percent for four consecutive months.

Annual average inflation declined further to 1.9 percent in May 2015 from 2.1 percent in the previous month and core inflation on a year on year basis also remained low at 2.6 percent in May 2015.

“Inflation is projected to remain comfortably below 4.0 percent during the remainder of the year.” the Central Bank said.

The Sri Lankan economy expanded by 6.4 percent in the first quarter of 2015, with positive contributions from all three key sectors of the economy.

The services sector and the industry sector grew by 7.5 percent and 6.5 percent, respectively.