The Central Bank has decided to maintain current policy interest rates as headline inflation declined to its lowest level since November 2009 in October 2014.
Accordingly, the Standing Deposit Facility Rate (Repurchase Rate) would remain at 6.50 percent while the Standing Lending Facility Rate (Reverse repurchase Rate) remains at 8.00 percent, the Central Bank announced Tuesday.
Statutory Reserve Ratio (SRR), the commercial banks' deposit requirement remains at 6.00 percent.
The recent reduction in domestic energy prices led to the lowest inflation of 1.6 percent in October 2014 compared to 3.5 per cent in the previous month.
The Central Bank expects the subdued commodity prices in the international market, recent budget proposals such as reducing the Value Added Tax (VAT) to 11 percent and stable inflation expectations to keep inflation at benign levels in the period ahead.
Credit extended to the private sector by commercial banks increased by Rs. 52.3 billion during the month of September, indicating a turnaround in the behavior of bank credit.
Sri Lanka rupee remained broadly stable supported by foreign currency inflows mainly on account of export earnings, tourism, remittances, and other inflows to the banking sector. Accordingly, the gross official reserves stood at an estimated US$ 8.8 billion.
In this background, the Monetary Board has decided that the current monetary policy stance of the Central Bank is appropriate.