Sri Lanka has to keep inflation in mid single digits to grow: CB Governor

Sept 21, 2012 (LBO) – Sri Lanka has to keep inflation in mid single digits allowing interest rates to be in single digits helping keep annual economic growth around 8.0 percent, Central Bank Governor Nivard Cabraal said. The index has briefly moved above mid single digits in the past few months peaking at 9.8 percent in July, after the rupee fell from 110 to 134 to the US dollar due balance of payments trouble brought on by sterilized foreign exchange sales.

The currency has now strengthened to 131.60 levels to the US dollar.

Sri Lanka has now had 43 months of single digit inflation, Cabraal said.

Stable Foundation

“The significance of that is not realized by many people, when you say we had 43 months of single digit inflation,” Cabraal told an economic forum organized by Bloomberg newswires.

“The only other period of some comparison was the 23 months of inflation in the early 2000s.

“Other than that Sri Lanka has traditionally been a country with high inflation and we had almost begun to feel comfortable with 10, 12, 15, 20 percent inflation.”

A central bank, which has a monopoly in circulated currency under legal tender laws, is the only is the only agency that can either

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