Member access

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

Central Bank of Sri Lanka : Monetary Policy Review August 2013

08/16/2013 | 03:59am US/Eastern
Recommend:
0

CommunicationsDepartment

30, JanadhipathiMawatha, Colombo 01, Sri Lanka.

Tel : 2477424, 2477423, 2477311

Fax: 2346257, 2477739

E-mail: dcommunications@cbsl.lk, communications@cbsl.lk

Web: www.cbsl.gov.lk


<![endif]>

Economic Research Department

16-08-2013

12-12-2012

Press Release

Monetary Policy Review - August 2013

The prudent demand management policies along withfavourable supply conditions have resulted in a continued low inflation environment in Sri Lanka. Inflation has remained at single digit levels for 4 ½ years with headlineinflation (year-on-year)for July 2013 easingfurtherto 6.1 per cent from 6.8 per cent in June 2013 and core inflation (year-on-year) also decliningin July 2013 to its recordlow of 3.1 per cent from 4.3 per cent in the previous month.Looking ahead, inflation is expected to remain in single digits during the remainder of 2013, and in mid-single digits in 2014, with such conditions beingconducive for sustained economic growth and improved domestic and international investor confidence.

In the external sector, merchandise exports in June 2013 haveshowed some turnaround, recording a positive year-on-year growth after the decline observedin the past 15 months. Meanwhile, imports have also inched up inJune (year-on-year),driven partiallyby the importation of certain one-off items, expanding the trade deficit during the month.However, the cumulative performance in merchandise trade depicts a salutary 7.1 per cent decline in the trade deficit for the first six months of 2013. Earnings from tourism and workers' remittances have continued to improve, while the financial inflows have been substantial in the first half of the year. Notable inflows to the financial account include FDI inflows amounting to US dollars 537.0 million, net inflows to the stock market of US dollars 120.2 million, net inflows to the Government securities market amounting to US dollars 664.4million and inflows to commercial banks of US dollars 664.3 million during the period. Such inflows display that the foreign investor confidence on Sri Lanka has remained unchanged despite the volatility caused by global markets reacting to the prospects of the tapering of quantitative easing by advanced economies.

The recent global developments have been reasonably encouraging with the US economy and the Eurozone showing signs of economic recovery in the second quarter of the year. The positive developments in advanced economies, if continued, would augur well for domestic economic growth as a result of astronger performance of the external sector.At the same time however, the wide fluctuations of currencies of trading partners and competitors in the international market would need to be closely monitored in order to address any adverse effects on Sri Lanka's external balance in the period ahead.

Year-on-year growth of broad money (M2b) decelerated to 15.8 per cent in June 2013 from 16.3 per cent in the previous month. The growth of credit extended to the private sector increased by 8.9 per cent on a year-on-year basis in June in comparison to the growth of 9.3 per cent in May 2013. With the market interest rates continuing to decline in response to the relaxation of the monetary policy stance since December 2012, it is expected that the growth of credit to the private sector would increase towards the desired levels during the second half of the year. A simultaneous reduction in credit to public corporations over the same period,mainly as a result of improving profitability of key state owned enterprises, would also help maintain broad money growth at levels envisaged for the year.

Considering the above, the Monetary Board at its meeting held on 15th August 2013, was of the view thatthe current monetary policy stance is appropriate,and therefore, decided to maintain the Repurchase rate and the Reverse Repurchase rate of the Central Bank of Sri Lanka unchanged at 7.00 per cent and 9.00 per cent, respectively. At the same time, the Board noted thatthere is yet more space for market lending rates to decline further, and that the reduction of lending rates on medium to long term credit facilities thus far,has been inadequate to reflectthe current monetary policy stanceand the low inflation environment.

The date for the release of the next regular statement on monetary policy would be announced in due course.

distributed by
Recommend :
0
React to this article
Latest news
Date Title
<1m ago Sports schedule for Wednesday, Sept. 3
<1m ago BEZANT RESOURCES : Appoints Non-Executive Chairman
<1m ago NOVO NORDISK A/S : Novo Nordisk discontinues its activities within inflammatory disorders
1m ago TATA STEEL : Back to where it all started for Jason and his growing business
1m ago MAGOR : Weather is a washout... but Pentwyn are celebrating the title ; Thomas, Carroll Welsh Club Conference
2m ago WEIR : *credit suisse raises weir to 'outperform' ('neutral') - target 3060 p
2m ago SODEXO : Troubled jail gets visit by inspectors
2m ago IMI : *credit suisse cuts imi to 'neutral' ('outperform') - target 1500 pence
2m ago NORWEGIAN ENERGY ASA : Production August 2014
3m ago HARGREAVES SERVICES : Suttons iron out a Pounds 27m deal for Imperial Tankers
Latest news
Advertisement
Hot News 
FERRO METALS : shares soar on supply
SHANTA GOLD : trebles revenues
CAPITAL GEARING : Net Asset Values
NYRSTAR : Miner Nyrstar to raise €600m for global upgrade
HARGREAVES SERVICES : refocuses its activities after new deal ; tom.keighley
Most Read News
1d ago FORMFACTOR : Raises Third Quarter Guidance Range
1d ago STUART OLSON : announces sale of Broda Construction
1d ago MEDICINOVA : to Present Data on MN-001 (tipelukast) for the Treatment of Idiopathic Pulmonary Fibrosis (IPF) During the 18th International Colloquium on Lung and Airway Fibrosis (ICLAF)
1d ago EXELIXIS : Announces Results from the COMET-1 Phase 3 Pivotal Trial of Cabozantinib in Men with Metastatic Castration-Resistant Prostate Cancer
2h ago U.S. business lobby says concerned China antitrust probes unfair
Most recommended articles
1d agoDJZambia Copper Miners Say Crippled by Unpaid $600 Million Tax Refund-Mines Body
4d ago S&P 500 edges up to set new record; best month since Feb
20m ago REDROW : UK housebuilder Redrow's full-year profit nearly doubles
27m ago Frankfurt court bans Uber from offering services
32m ago Honda says August China auto sales down 5.5 percent year-on-year
Dynamic quotes  
ON
| OFF