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Thursday, July 25, 2013 - 04.34 GMT

Policy rates maintained, current monetary policy appropriate


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 Tuesday the Central Bank said Wednesday the Repurchase rate would remain at 7.00 percent while the Reverse Repurchase rate remains at 9.00 percent.

The Central Bank in its monetary policy review released Wednesday said inflation (year-on-year) for June 2013 eased to 6.8 percent from 7.3 percent in the previous month.

The Bank expects minimal seasonal variations in the inflation in the future and expects it to remain at single digit levels for the remainder of the year supported by improved inflation expectations, supply side improvements and the absence of demand driven inflationary pressures.

The Central Bank said the recent reduction of the Statutory Reserve Ratio (SRR) by 200 basis points contributed to the monetary policy relaxation process that commenced in December 2012, and provided the financial markets with a further stimulus to support the growth momentum of the economy.

The Monetary Board considering the inflows to the government and the decline in the trade deficit has decided that the current monetary policy is appropriate and to keep the rates unchanged.

"However, as per the revised global economic outlook of the IMF, weaker than expected economic performance in advanced economies may yet prove to be a dampener in revitalizing external demand and would need to be watched carefully in the months ahead," the Central Bank cautioned.





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Last modified: July 25, 2013.

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