The Monetary Board of the Central Bank (CB) decided to maintain the policy interest rates of the Central Bank unchanged.

Accordingly, the Repurchase rate and the Reverse Repurchase rate of the Central Bank would remain at 7.00 per cent and 8.50 per cent, respectively.

The favourable developments that were witnessed last year continued into 2011, especially in the Industry and Services sectors of the economy. In the Agriculture sector, although the Maha harvest was affected by the floods, the expected improvement in paddy harvest in the 2011 Yala season would serve to help the continuation of stable paddy prices throughout the year, stated the CB.

With the continuous supply of vegetables and other field crops after the floods, domestic food prices have started to decline, thereby easing pressure on inflation, it added.

As expected, inflation declined in May 2011 to 8.8 per cent from 9.8 per cent in the previous month. The annual average inflation showed a marginal increase of 0.3 per cent to 6.9 per cent in May, while the monthly change in the Index was 0.6 per cent.

Both exports and imports continued to expand while earnings from tourism, workers’ remittances, and the inflows to the capital and financial account have resulted in the balance of payments recording a surplus in the first quarter of the year.