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Sunday, March 10, 2013 - 8.09 GMT
Central Bank maintains interest rates


Central Bank has decided to maintain current policy interest rates as its Monetary Board is of the view that the current monetary policy stance is appropriate.

Following its monthly Monetary Board meeting held Thursday, the Central Bank said the Repurchase rate would remain at 7.50 percent while the Reverse Repurchase rate remains at 9.50 percent.

The inflation remained unchanged for last month at 9.8 percent but the Central Bank expects the inflation to decline from March onwards and reach a more favorable level by the end of the year.

The inflation has been at single digit levels for the past 49 months, the policy review for March 2013 pointed out.

'The positive outlook for inflation is expected to continue, supported by well contained demand and favorable domestic and global supply conditions," it said.

Private sector credit growth declined further to 15.5 percent in January 2013 from 35.2 percent in March 2012 although the government and public corporations borrowing from banks expanded by 18.3 percent in January 2013.

The Central Bank expects, with the anticipated price adjustments in the energy sector, the state owned enterprises would rely less on bank financing and the move would result in the release of additional resources for the private sector.

The Central Bank was concerned that two months after relaxing monetary policy, interest rates pertaining to both deposit and lending interest rates still remain high.

However, following recent discussions that the Central Bank had with leading commercial banks, it is anticipated that both deposit rates and lending rates will be adjusted in the near term, in line with the direction of monetary policy, the Bank said adding that such adjustments are expected to stimulate private sector. So far during the year, the balance of payments has continued to record a surplus, and a comfortable overall surplus is anticipated in 2013.

Although the Central Bank has purchased US$ 486 million on a net basis from the market this year, exchange rate has shown a greater stability due to increased foreign exchange inflows to the government securities market, and from tourism and private transfers.





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Last modified: March 10, 2013.

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