- Created on Wednesday, 24 October 2012 13:22
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The Central Bank has decided to maintain current policy interest rates as the Monetary Board of the Bank is satisfied that the tight policy measures adopted earlier this year to moderate private sector credit expansion continued to prove effective.
Following its monthly Monetary Board meeting held Monday(22), the Central Bank said in a statement today the Repurchase rate would remain at 7.75 percent while the Reverse Repurchase rate remains at 9.75 percent.
The Monetary authority said private sector credit growth moderated substantially to 28.7 percent, year-on-year in August, falling below 30 percent for the first time since March 2011.
However, reflecting higher public sector borrowing, the broad money growth in August was higher than the previous month despite the slowdown of credit to the private sector.
The slowdown in global economy, especially in Europe and China, has negatively impacted Sri Lanka's economic growth and reflecting the downturn, growth of Sri Lankan exports too has decelerated during the last six months, the Central Bank said.
The Bank added that however, the due to the measures introduced earlier this year, the imports have also fallen substantially, leading to an improvement in trade balance.
With the resultant improvement in the trade balance, together with other inflows, the balance of payments has recorded a surplus of US$ 305.9 million by August, and helped to raise the current level of official reserves to US$ 7 billion, the Central Bank noted.
Based on those developments in the finances, the monetary board has decided to maintain policy interest rates.