Staying Put

The Central Bank opted not to tinker with its short-term rates for the seventh consecutive month, as inflation bottomed out in lull period of economic growth.
The Bank kept the overnight repurchase rate at 7.0 percent, while the reverse repurchase rate stayed put at 8.5 percent.rn

rn”Available indicators for the first quarter of 2004 indicate a mixed performance,” the Bank said Friday.rn

rnWhile drought kept agro output down during the first quarter of this year, political uncertainty dampened economic growth in the run up to April polls, the statement said.rn

rnInflation, which hit a 20-year low last month, is likely to pick up in the short-term due to rising international oil prices, the bank said.rn

rn”The point-to-point changes (in domestic inflation) indicate a bottoming-out of the decline from a significantly low level, as expected,” the Bank said.rn

rnThe Colombo Consumer Price Index, measured by a 12-month moving average, fell to 3.7 percent in April from 6.3 percent in December. rn

rnThe Bank said it does not expect the current low interest rate scenario to change immediately, until the new government finalises its economic plan.rn

rnThe next monthly monetary policy review announcement is set for June 16.rn

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-LBO Newsdesk: LBOEmail@vanguardlanka.comrn