Sept 23, Colombo: Sri Lanka's Central Bank is considering to review its tight monetary and policies towards the end of the year, the Governor Ajith Nivard Cabraal has said.
Sri Lanka earlier this year implemented tight measures to arrest the ballooning trade deficit which rose to nearly US$ 10 billion in 2011 mainly due to heavy spending on vehicle imports and fuel.
However Sri Lanka's economic growth also slowed down to a two-and-half-year low in the second quarter and it is estimated to be a minimum at 6.7 percent this year.
The Governor has said that the Central Bank needs a little longer to see the results of its tight policies before deciding whether to relax them in order to put back momentum in the economy and he will be able to take a clearer view towards the end of the year.
"By that time we will be in a better position to understand, the new equilibrium we are looking at," he has said in an interview with Reuters.
The Central Bank in February raised the interest rates for the first time since 2007 to control the spiraling trade deficit and to stop the decline in foreign reserves. The government and Central Bank together allowed the currency exchange rate to free fall and tightened monetary policy to curtail the 'credit growth of the country's banks.
For now the Central Bank will leave the policies unchanged, Cabraal has said.