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Sunday, August 21, 2011 - 07.55 GMT |
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CB maintains policy interest rates |
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The Central Bank has decided to maintain the current policy interest rates following its monthly Monetary Board meeting held Thursday (18).
In the Monetary Policy Review released yesterday, the Bank said its Repurchase rate would remain at 7.00 percent while the Reverse Repurchase rate remains at 8.50 percent.
The Bank said that all key sectors of the economy have contributed positively to the economy and the growth momentum of the economy is continuing as evident by the leading economic indicators.
Inflation, as measured by the year-on-year change in the Colombo Consumers' Price Index, increased to 7.5 percent in July 2011 from 7.1 percent in June 2011, while annual average inflation increased from 6.7 percent in June to 7.0 percent in July.
However, with the continuous improvements in the supply of most food items, the Central Bank expects the inflation to ease in the coming months.
The Bank was encouraged by the performance in the external sector with increased foreign trade, improved worker remittances and inflows to the services account from higher earnings in tourism industry.
During the first half of the year the country has received US$ 413 million in foreign direct investment (FDI) inflows making it possible to achieve the target of US$ 1 billion set for the year, the Central Bank said.
According to the policy review, the gross official reserves without ACU balances have increased to US$ 8.158 million this year from US$ 6.610 at the end of last year.
With increased inflows, the rupee has appreciated by 0.96 per cent against the US dollar so far during the year.
"The Central Bank will continue to closely monitor the growth of monetary aggregates and will implement appropriate measures if demand-side pressures in the economy increase," the Central Bank said in its review.
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