Sri Lanka central bank to keep policy rates steady

Colombo, Oct 14 (IANS) The Central Bank of Sri Lanka (CBSL) announced on Thursday that it would keep policy rates at their current levels while maintaining inflation at targeted levels and supporting economic recovery.

In its seventh monetary policy review for the year, the CBSL announced that the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) would remain at 5 per cent and 6 per cent, respectively, until the next review on November 25, reports Xinhua news agency.

The CBSL said that inflation had accelerated in recent months, partly due to surging global commodity prices which would cause headline inflation to deviate from the targeted range in the near term.

"While such supply-side developments in the near term do not warrant monetary policy tightening, measures already taken by the Central Bank in relation to interest rates and market liquidity would help stabilise demand pressures over the medium term," the CBSL said.

The CBSL added the country recorded real growth of 4.3 per cent and 12.3 per cent in the first and second quarters of 2021 respectively.

"Available indicators and projections suggest that the real economy would grow by around 5 per cent in 2021, and gradually traverse to a high and sustained growth trajectory over the medium term, following near-term stabilization measures that are being put in place by the government and the central bank," the CBSL said.

The CBSL noted that export revenue has crossed $1 billion for three consecutive months, with additional inflows from tourism expected in the coming months.

Sri Lanka's foreign reserves stood at $2.6 billion at the end of September.