Sri Lanka’s Central Bank has reduced its key policy rates by 50 basis points each to stimulate the domestic economy, as it is concerned by the slower than expected pick-up in economic activity in the first few months of 2013.
Accordingly, the Bank has placed the Repurchase rate at 7-pct while the Reverse Repurchase rate is placed at 9-pct, based on the decision taken at the latest Monetary Board meeting.
Central Bank in a statement issued says, the rate reduction was also prompted as the Monetary Board is of the view that there is now a need to stimulate the domestic economy, particularly in the light of the gradual moderation in headline inflation and subdued demand pressures in the economy
“The Monetary Board has also observed that the economy has now developed greater space for policy maneuverability, and the capacity to return to a high growth path without fueling inflationary pressures”, further adds the Bank statement.
Meanwhile the Bank says, the reserve maintenance period of commercial banks will also be increased to two weeks from one week with effect from 1st June 2013 in order to offer greater flexibility to commercial banks in managing their liquidity, while maintaining the Statutory Reserve Ratio at the current level of 8 per cent.
Sri Lanka cut rate by 50 points
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Oleh
Lanka Stocks
