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* Sri Lanka maintains policy rates, current monetary policy appropriate
Fri, Mar 21, 2014, 10:21 am SL Time, ColomboPage News Desk, Sri Lanka.

Mar 21, 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.

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 8.50 percent, the Central Bank announced Friday.

The Central Bank said the Sri Lankan economy showed its strong potential with broad-based GDP growth taking place in all three sectors of the economy in 2013.

Well sustained by low and stable inflation, the economy, which grew by 7.3 per cent in 2013 compared to 6.3 per cent in 2012, signaling a shift towards a higher and sustainable growth trajectory, the Central Bank said releasing its Monetary Policy Review fort the month of March today.

According to the recently released data from the Department of Census and Statistics, the final quarter of 2013 recorded a GDP growth of 8.2 percent and exhibited a surge in performance in the Agriculture and Industry sectors, while the Services sector growth indicated some moderation.

During the year, the Industry sector showed a robust growth of 9.9 percent, while the Agriculture and Services sectors recorded growth rates of 4.7 percent and 6.4 percent, respectively.

The inflation, at 3.5 percent in February 2014, continued to remain at single digit levels for the 61st consecutive month, and is expected to remain at these levels throughout the year.

Although the outlook for inflation remains encouraging from a demand perspective, the Central Bank said it will continue to closely monitor possible supply disruptions resulting from the drought conditions experienced in certain parts of the country.

Sustaining its growth momentum in the external sector, earnings from exports grew by 23.2 per cent, year-on-year, during January 2014.

Reflecting the recovery in exports and the muted growth in imports, the trade deficit contracted by 5.9 percent in January 2014 to US$ 756 million.

The Monetary Board was of the view that the current monetary policy stance is appropriate, and therefore, decided to maintain the policy rates unchanged, the Central said.

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