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Sri Lanka seen holding policy interest rates steady

ECONOMYNEXT| 14.02.2018

Sri Lanka’s central bank is likely to keep its key policy interest rates unchanged when it announces its monetary policy stance tomorrow owing to favourable macroeconomic conditions, a brokerage said.
The central bank is expected o keep its Statutory Reserve Ratio (SRR) unchanged at 7.50% with inflation and private sector credit growth under control, First Capital said in a research note.

First Capital Research said it believes the inflation rate will moderate and foreign reserves will be maintained above Rs7.0 billion levels, equivalent to four months of imports.

Although private sector credit growth picked up by Rs61.6 billion in November 2017, after slowing down in October, First Capital said it believes overall credit is likely to continue to remain under check.

It forecast the February 2018 Colombo Consumer Price Index headline inflation to be at 5.1%.

“We believe inflation will be under control over the next 2-3 months while there could be some upward pressure towards 2Q2018.”