Sri Lanka cbank expects to keep policy rates steady

Sri Lanka’s central bank is expected to keep its key interest rates unchanged this week to support the country’s economic growth.

Economists predicted the central bank would keep its standing deposit facility rate (SDFR) and standing lending facility rate (SLFR) unchanged at 7.25 per cent and 8.75 per cent, respectively, reports Reuters.

The Reuters poll also forecast the statutory reserve ratio (SRR) to stay at 7.50 per cent.

The International Monetary Fund (IMF) earlier this month urged Sri Lanka to maintain a tightening bias on monetary policy until clear signs emerge that inflationary pressures and credit growth are moderating.

Central bank governor Indrajit Coomaraswamy has said the monetary authority does not see a need for a rate rise due to lower core inflation, but it is cautiously monitoring the numbers.

The central bank has said it wants to curb credit growth to 15 per cent by end this year.

Annual private sector credit growth slowed to 17.5 per cent in September from May’s 18.9 per cent and well off a near four-year high of 28.5 per cent hit in July 2016.

Consumer inflation was up 7.6 per cent in November from a year earlier, slowing from a record high of 7.8 per cent hit in the previous month.

The central bank has tightened monetary policy four times since December 2015 through March this year to fend off pressure on the fragile rupee and curb stubbornly high credit growth that stoked inflation.