Sri Lanka says meeting money growth targets, inflation easing

March 30, 2007 (LBO) – Sri Lanka’s Central Bank said Friday it had met its targets for first quarter reserve money expansion, a sign that it had the ability to control raging inflation. Central Bank governor Ajith Nivard Cabraal said it had maintained its first quarter target for reserve money growth of 254 billion rupee as of March 30.

We’re within the target, he told a news conference after the presentation of the bank’s annual report for 2006.

So we’re showing that we have the necessary capacity and discipline to control inflation. Whatever action that is needed to control inflation is being taken.

By March 29, reserve money was 252.1 billion two billion lower than the target.

Cabraal noted that inflationary pressure rose significantly after April 2006 and inflation hit 20 percent but said the bank was taking steps to moderate inflation over the next few months.

Last year the bank was forced to print 38.5 billion rupees to finance the budget deficit causing high inflation and pressure on the rupee.

The bank said in its annual report that the conduct of monetary policy in 2006 was aimed at containing high money and credit expansion to