Sri Lanka’s Central Bank Keeps Policy Rates Steady

Sri Lanka’s Monetary Board of the Central Bank has decided to keep its key interest rates steady despite rising headline inflation.

Monetary Board said the recent escalation of headline inflation is supply driven and is of short term nature and inflation is expected to moderate from December 2017 and reach the desired levels in 2018.

The board said the policy decision is consistent with the objective of maintaining inflation at midsingle digit levels over the medium term and thereby facilitating a sustainable growth trajectory.

The growth of credit to the private sector from commercial banks continued to moderate in September 2017.

Central Bank said net credit to the government also recorded a decline largely on account of the retirement of Treasury bill holdings of the Central Bank.

“With repayments made by key public corporations, the declining trend in credit to public corporations observed since June 2017 continued in September as well.”

Against this backdrop, the Monetary Board has decided to maintain the Standing Deposit Facility Rate and the Standing Lending Facility Rate at 7.25 percent and 8.75 percent.

The full statement is reproduced below.