Sri Lanka maintains policy rates, monetary policy appropriate

Monetary Board was of the view that the current monetary policy stance is appropriate, the Central Bank said Friday in its monetary policy review for July.

Accordingly, the Monetary Board has decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 percent and 7.50 percent, respectively.

Sri Lanka’s inflation remained at near-zero levels recording 0.1 per cent in June 2015 compared to 0.2 per cent in the previous month and the current level of inflation is expected to continue in the next few months mainly reflecting the benefit of downward adjustments in administered prices of fuel and energy.

Increased expenditure on imports relative to earnings from exports widened the trade deficit in May 2015. Gross official reserves, which stood at US$ 6.8 billion at end May 2015, are estimated to have increased to US$ 7.5 billion by end June 2015 largely representing the receipt of the proceeds from the International Sovereign Bond and Sri Lanka Development Bond issuances.

Meanwhile, the Department of Census and Statistics (DCS) has replaced the base year for national accounts statistics from 2002 to 2010, while upgrading the compilation methodology to comply with the United Nations System of National Accounts – 2008.

According to the rebased national accounts statistics, real GDP growth for the first quarter of 2015 is estimated at 6.0 per cent with strong performance in the Services sector.

Considering the developments in the economy, the Monetary Board, at its meeting held on 23 July 2015, has decided to keep the current policy rates unchanged.