Sri Lanka’s Central Bank hikes interest rates

Sri Lanka's Central Bank raised its key interest rates by quarter basis points for the fourth time on Thursday to reign in inflation and curb monetary expansion.





Sri Lanka's Central Bank raised its key interest rates by quarter basis points for the fourth time on Thursday to reign in inflation and curb monetary expansion. The repurchase rate, which drains money from the banking system, goes up 25 basis points to 8.





75 percent and the reverse repurchase rate moves up to 10.25 percent, the bank said in a statement posted on its website, following the monetary board meeting on Wednesday.

On September13, the Central Bank raised its repurchase and reverse repurchase rate by quarter-point, citing concerns about an increase in broad money growth due to expansion in private sector credit.

Both rates were raised by half a percentage point on June 15 and a quarter-point on May 13.

"A deceleration in monetary expansion and a further containment of inflation and inflation expectations are expected with these measures," the statement said.

The bank expects financial institutions to raise the deposit rates immediately thereby strengthening the effectiveness of these policy measures.

Sri Lanka's inflation rate dropped to 12.

1 percent in November from a year earlier after a 12.5 percent gain in the previous month, after prices of some food items eased up.

More to follow…..

-LBO Newsdesk: LBOEmail@vanguardlk.com