Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  News


Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

Central Bank of Sri Lanka : Monetary Policy Review August 2013

share with twitter share with LinkedIn share with facebook
share via e-mail
08/16/2013 | 09:59am CEST


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


Economic Research Department



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
share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news
Date Title
04:04p MID PENN BANCORP INC : Results of Operations and Financial Condition, Financial Statements and Exhibits (form 8-K)
04:03p OKWAVE : Releases Study by Davia to Show Latest 2016 Online Birthday Card Trends
04:03p FRED OLSEN ENERGY : Extraordinary General Meeting
04:03p NWEST ENERGY : Increases Financing
04:03p RITE AID : and P&G Team with NFL Star Antonio Brown to Challenge Fans to Dance and Clean Their Way to Super Bowl LI
04:02p INTERTEK : Partners with Brookfield Multiplex as Quality Consultant on Al Maryah Central in Abu Dhabi
04:02p TABLE TRAC INC : Submission of Matters to a Vote of Security Holders (form 8-K)
04:02p EMLAK KONUT GAYRIMENKUL YATIRIM ORTAK : The Year- End Appraisal Report for Varyap Meridian
04:02p EMLAK KONUT GAYRIMENKUL YATIRIM ORTAK : The Revision of Company's Year-End Target
Latest news
Hot News 
12.98%Fashion retailer French Connection's shares jump on takeover hopes
-15.38%COBHAM : British defence group Cobham cuts profit forecast again
-10.69%AIXTRON : Germany mum on why it has withdrawn clearance for Chinese takeover of Aixtron
4.16%PHILIPS : Profit Lifted by Health-Care Business
-5.62%SYNGENTA : and ChemChina Miss EU Deadline for Antitrust Remedies
Most Read News
10/23 For AT&T, Time Warner was always on the menu
04:56aDJGlobal Stocks Inch Up Ahead of Data
10/23 AT&T-Time Warner deal sparks calls for scrutiny in Washington
09:16a TD Ameritrade to buy Scottrade in two-step deal with TD Bank
10/23 Britain's banks to reveal solid third-quarter results, warn of Brexit storm ahead
Most recommended articles
10/23 U.S. options market not very 'Trumped up' ahead of vote
10/21DJTWITTER : Hundreds Evacuated from London's City Airport
10/21DJFACEBOOK : Employees Pushed to Remove Trump Posts as Hate Speech
10/19DJGold Prices Boosted by Weaker Dollar