Sri Lanka policy rates unchanged in November 2014::Inflation declined: Central Bank

Nov 18, 2014 (LBO) Sri Lanka unchanged its 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 November monetary policy review. The island inflation continued to remain in low single digit levels, declined to 1.6 percent in October from 3.5 percent in the previous month.

Core inflation (Y-o-Y) decelerated to 3.6 percent in October 2014 compared to 3.7 per cent in September 2014.

It is expected that subdued commodity prices in the international market, recent budget proposals such as reducing the Value Added Tax (VAT) to 11 per cent and stable inflation expectations would keep inflation at benign levels in the period ahead, Central bank said in its policy review.

The growth of broad money which moderated in July 2014 to 11.9 per cent (y-o-y), accelerated to 12.8 per cent (y-o-y) in September 2014, reflecting the expansion in bank credit obtained by the private and public sectors.

Net credit to the government from the banking sector has increased by 87.3 billion rupees in the first nine months compared to the projected bank borrowing of 100 billion rupees for the year, and credit to public corporations has