Aug 15, 2014 (LBO) Sri Lanka unchanged a policy rate corridor at 6.5 to 8.0 percent in order to remain broadly on target in 2014 with low inflation the Central Bank in its August monetary policy review. Credit to private sector has grown by eight million rupees in June although the private sector credit growth decelerated on a year-on-year basis.
“Credit obtained by the private sector is expected to increase gradually with high levels of liquidity in the domestic money market, low short term lending rates and declining longer term rates.” the Central Bank said in its March monetary policy review.
The bank says continued low inflation has enabled depositors to receive a positive real interest rate on deposits while encouraging financial institutions to introduce new products offering long term benefits to savers. The island inflation continued to remain in low single digit levels, although it increased to 3.6 percent on a year-on –year basis in July 2014 from 2.8 percent in last month due to high prices of certain food items caused by adverse weather condition.
Although supply disturbances triggered by adverse weather conditions could cause temporary price fluctuations, the outlook fo