Central Bank explains recent policy measures to Sri Lanka’s financial community

November 02, 2006 (LBO) – Sri Lanka’s central bank met senior executives of the country’s financial community this week, in a bid to de-mystify recent monetary policy measures taken to stabilise the economy and reinforce its resolve to fight inflation. Governor Nivard Cabraal said measures taken to contain credit growth were aimed at curbing inflationary pressures, so that growth could be sustained over the longer term.

“You should not think that we are putting a dampener on your activities,” Cabraal said.

“We want to sustain the high growth path we have achieved by having stable conditions to sustain growth over a longer period.”

The central bank had earlier come under fire from critics in recent years for printing money, pushing up inflation and undermining the national currency.

Punch Bowl

Quoting former Federal Reserve Chairman William McChesney Martin, Senior Deputy Governor W A Wijewardene said it was the duty of the Central Bank to ‘take away the punch bowl just when the party starts getting interesting’.

The central bank’s primary goals were to have economic and price stability rather than other objectives such as lowering unemployment.

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