By CentralBankNews.info
Sri Lanka’s central bank left its key interest rates unchanged, including the standing deposit rate at 6.0 percent, saying it expects official reserves to rise during the year.
The Central Bank of Sri Lanka (CBSL) has maintained its rates since cutting them by 50 basis points in April.
Last week the International Monetary Fund (IMF) said the country’s financial system was stable and the current monetary stance appropriate, but a tightening bias appeared prudent in light of rising core inflation, a resurgence of private credit and signs of receding slack in the economy.
Sri Lanka’s headline inflation rate was an unchanged minus 0.2 percent in August from July but the IMF expects it to end the year around 3.0 percent, while core inflation rose to 4.4 percent in August from 3.5 percent in July due to higher demand for domestic non-tradable goods.
Earlier this month the central bank allowed the rupee to float freely by not setting daily spot prices, a move the IMF welcomed, adding that exchange rate flexibility would help maintain competitiveness and facilitate an increase in CBSL foreign exchange reserves.
The Central Bank of Sri Lanka issued the following statement:
Taking the above developments in the economy into consideration, the Monetary Board, at its meeting held on 25 September 2015, was of the view that the current monetary policy stance is appropriate. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 per cent and 7.50 per cent, respectively.”
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