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* Sri Lanka maintains policy rates, current monetary policy appropriate
Mon, Jul 14, 2014, 10:48 am SL Time, ColomboPage News Desk, Sri Lanka.

July 14, Colombo: Sri Lanka's Central Bank has decided to maintain current policy interest rates as low inflation environment continued with the trade deficit contracting for the eight consecutive month.

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 Monday.

Inflation recorded its lowest at 2.8 percent in June 2014 since February 2012 while the trade deficit has contracted for the eighth consecutive in May 2014 by 47.9 percent.

Although prices of some items in the food category increased, the base effect and the decline in non-food prices have contributed to the low inflation.

Meanwhile, the Central Bank has also noted with satisfaction, the recent steps adopted by several bank and non-bank financial institutions supervised by the Central Bank, to introduce a number of investment instruments providing long term benefits aimed at senior citizens who rely on interest income

Looking ahead, The Central Bank expects the year-on-year inflation to remain comfortably within mid-single digit levels during the remainder of the year in spite of weather related variations in agricultural produce.

In the external sector, inflows from workers' remittances and earnings from tourism have continued to grow.

Meanwhile, the Central Bank has also noted with satisfaction, the recent steps adopted by several bank and non-bank financial institutions supervised by the Central Bank, to introduce a number of investment instruments providing long term benefits aimed at senior citizens who rely on interest income. Such innovative financial products and schemes would provide the essential comfort to this segment of the population in a sustained low inflation environment, the Bank said.

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