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FC Research forecasts no change in policy rates

Daily Mirror | 2017-12-28

By First Capital Research

FC Research, the research arm of First Capital Holdings PLC, yesterday ruled out a change in policy rates at the monetary policy review that will be announced this morning.
“FC Research believes that despite inflation remains high, GDP growth and credit growth are below our expectation.

Consideration of the above macroeconomic environment, the current monetary policy is appropriate and no change is required,” FC Research said in a brief note. According to FC Research, there is 90 percent bias towards the Central Bank keeping the policy rates unchanged and a 10 percent bias towards cutting the rates by 25 basis points.

FC Research in August upgraded private sector credit growth for 2117 to 16 percent from 14 percent amid a possible pickup towards the year end.

The private credit figure decelerated to Rs.50 billion in September 2017.

Sri Lanka’s GDP grew 3.3 percent in 3Q17, impacted by the poor performance of the agriculture sector due to unfavourable weather conditions.

Meanwhile, FC Research forecasts December headline inflation to be at 7.2 percent.

“We believe inflation will be under control over the next two to three months while there could be some upward pressure towards 2Q2018.”


The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management, retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

First Capital Holdings PLC is an investment bank and is the pioneer non-bank affiliated Primary Dealer in Treasury Bills and Bonds in Sri Lanka. With a track record of over 25 years, the Company was the first licensed primary dealer appointed by the Central Bank, and is also the only listed and rated primary dealer in Treasury Bills and Bonds in Sri Lanka.
First Capital delivers the only source for fixed income research in the local financial services industry. The Company’s best-in-class research team provide dynamic reports including economic reviews and proprietary research, encompassing fundamental, quantitative and technical analysis.