Aug 15, Colombo: Sri Lanka's Central Bank has decided to maintain current policy interest rates as low inflation environment continued and the real economic growth is likely to remain approximately on target in 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 8.50 percent, the Central Bank announced Friday.
Inflation continued to remain in low single digit levels, although it increased to 3.6 percent on a year-on-year basis in July 2014 from 2.8 percent in the previous month reflecting higher prices of certain food items caused by adverse weather conditions.
However, the Central Bank says the outlook for inflation remains benign although supply disturbances triggered by adverse weather conditions could cause temporary price fluctuations.
Market interest rates have continued to adjust downwards in response to monetary policy measures taken by the Central Bank in the recent past.
The monetary authority said the external sector strengthened further in recent months supported by timely and appropriate policies of the Central Bank and the Government.
Favorable developments in exports observed from June 2013 are expected to continue during the remainder of 2014.
Higher inflows from workers' remittances and from tourism along with the lower trade deficit have positively impacted the external current account and led the country's gross official reserves to surpass the historic milestone of US$ 9 billion, and currently standing at around US$ 9.2 billion, the Central Bank said.
In the meantime, the Central Bank has purchased over US$ 1 billion from the domestic foreign exchange market on a net basis so far during the year.