Sri Lanka policy rates unchanged: Inflation declines due to crude oil prices: Central Bank

Dec 12, 2014 (LBO) – Sri Lanka Central Bank says the current monetary policy stance is appropriate and accordingly decided to unchange the policy rate corridor at 6.50 percent to 8.00 percent, respectively. The impact of the contraction in pawning advances on the overall credit growth that was observed since early 2013 has now ended, the regulator said.

The bank says going forward, continued improvements in macroeconomic fundamentals would bolster market confidence and nurture positive investor sentiments enabling the maintenance of a high sustainable growth rate in the medium term.

In the external sector, volatile global conditions, cross currency movements and eased monetary conditions widened the trade deficit somewhat in October 2014.

Given the continued and expected inflow of earnings from tourism, workers’ remittances and inflows to the financial account, the balance of payments (BOP) is projected to record a higher surplus in 2014 than in the previous year.

Accordingly, gross official reserves are expected to remain at comfortable levels by end 2014, the Central Bank said.

The island’s inflation continued to remain in low single digit levels, for 70 consecutiv