The Monetary Board which met on Monday for the sixth review of the monetary policy stance had decided to maintain the policy interest rates of the Central Bank of Sri Lanka (CBSL) at their current levels, said Dr C Amarasekara, Acting Director, Economic Research, presenting the Monetary Policy Review No 6-2017, yesterday in Colombo.
The Standing Deposit Facility Rate will be held s at 7.25%, Standing Lending Facility Rate at 8.75% and Statutory Reserve Ratio will remain at 7.5%, he said.
“The Monetary Board also observed that several risks that were observed at the beginning of the monetary tightening cycle have subsided. However the Board noted that some risks still prevail,” he said.
In the first half of 2017, there was an upward adjustment in all market interest rates. But after the first half, so far during the year, there has been a decline in short-term market interest rates, particularly in call money market rates.
With improvements in the government securities market, it was observed that the government securities interest rates were also declining in recent months, he said.
“We have seen market interest rates, other than short-term interest rates stabilizing at higher levels.”
Dr Amarasekara also said they were expecting the private credit growth to decline to 16% and in August credit growth has slowed to 18%, from 18.6% in June.
Rs 404 billion has been loaned to private borrowers in 2017 compared to Rs 456 billion last year. He said that export earnings on cumulative basis had increased by 6.5% YoY and import expenditure increased by 9.2% YoY during the first seven months of 2017.
Workers’ remittances in July increased 3.4% YoY to US$ 3.9 billion.
Dr Amarasekera said foreign reserves which stood at US$ 6 billion at the end of 2016, had reached US$ 7.36 billion by September 21.
Earnings from tourism from January to August were estimated at US$ 2,414 million.
Dr Amerasekera also said that the Sri Lanka rupee depreciated by 2.6% by the end of July 2017 and has showed some stability since then.
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