Sept 17, Colombo: Sri Lanka's 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 as the economy recorded an impressive growth in the second quarter.
Accordingly, the Repurchase rate would remain at 7.00 percent while the Reverse Repurchase rate remains at 9.00 percent, the Central Bank announced today.
Sri Lanka's economy expanded by 6.8 percent in real terms in the second quarter of 2013 in comparison to the growth of 6.0 per cent recorded in the first quarter.
Despite the setback in the Agriculture sector, sustained high momentum in the Industry sector and a recovery in the Services sector led the economic growth in the second quarter, the Central Bank said.
While the agriculture sector, one of the three major sectors of the economy recorded a negative1.1 percent growth in the quarter, Industry and Services sectors recorded 10.1 percent and 6.6 percent increases respectively contributing to the overall growth.
The monetary authority expects the gradual increase in GDP growth to lead the economy to recover from the deceleration observed in 2012 and expand by the targeted rate of 7.5 percent for this year.
Sri Lanka's inflation has remained low so far this year due to the absence of upward pressures from international commodity prices and to the increased domestic food supply. Inflation increased to 6.3 percent in August 2013 from 6.1 percent in the previous month.
The Central Bank said the external sector remained stable, supported by the improving trade deficit, foreign inflows in the form of earnings from tourism, workers’ remittances, foreign direct investments (FDI), foreign debt capital to the banking sector and foreign investments in Government securities.