Sri Lanka opted to hike its key short term rates by 50 basis points to contain further increases in credit to the public and private sectors. Sri Lanka opted to hike its key short term rates by 50 basis points to contain further increases in credit to the public and private sectors. The Central Bank on Wednesday following it monthly monetary policy meeting said Broad money or the total money available in the economy continues to grow at around 20 percent, mainly due to an increase in credit to the public sector and the private sector.
The bank said that credit expansion increases the demand pressure on inflation warranting further tightening of the monetary policy.
Under the strategy to tighten monetary policy the board has decide to push up the repurchase or repo rate, at which the Central bank lends to the banking sector, to 8.25, after last raising it by 25 basis points in May.
The revere repo rate will move up to 9.75 percent.
A bank statement Wednesday said “The monetary policy tightening taken place thus far has helped to contain the monetary expansion to a certain extent.”
The outright sales of Treasury bills