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Sri Lanka cuts interest rates

11 January 2011 04:39 am - 23     - {{hitsCtrl.values.hits}}

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Sri Lanka's Central Bank today reduced lending rates, a move seen by analysts as one to encourage economic growth.

The bank said the repurchase rate has been reduced by 25 basis points to seven percent while the reverse repurchase rate reduced by 50 basis points to 8.50 percent.

"The government looks to encourage investment", said Thusath de Silva an analyst.

"The encouragement of substantial and sustained private sector participation would be vital", the Central Bank said in a statement.

The bank said the inflation has eased, while acknowledging that prices of some selected food items increased.

Sri Lanka's annual average inflation in 2010 was put at 5.9 percent.

The bank said the Sri Lankan rupee has been stable, cushioning the high costs of imported commodities.

Since middle of 2009 the Sri Lankan government has introduced a series of imports tariff reductions aimed at driving growth in the conflict-free environment after the long-standing civil war ended in May 2009.

Source: Xinhua

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  Comments - 23

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  • Michael Pereira Tuesday, 11 January 2011 07:03 AM

    The GOVT should continue to do Macro Economic Reforms to encourage more private sector activities thereby driving economic growth. The GOVT cannot do everything. What it can do is to come up with meaningful reforms in Tax, Labour, Tarrifs, etc . We cannot blame the GOVT all the time. People should do there best and work hard.

    dpl Tuesday, 11 January 2011 04:37 PM

    govt must change the central bank govener

    agasthi abeysinghe Tuesday, 11 January 2011 03:14 PM

    This is bad for the people who depend on interest of fixed deposit as it goes further down.Govt.should think this too.
    I dont believe if someone saying inflation is low.

    willows Tuesday, 11 January 2011 11:33 AM

    are you joking, next day they will be without addresses???

    Keith Tuesday, 11 January 2011 09:01 AM

    Inflation has many roots. When there is growth and there is more cash in the market, the demand grows and prices pick up. Or if the demand does not meet the production there is increase in price. Further if global commodity prices increase there is inflation. Price of essential goods is not the only factor that contributes.

    desilva Tuesday, 11 January 2011 08:22 AM

    Logical much?

    desilva Tuesday, 11 January 2011 08:19 AM

    Inflation does not cease. It changes with many factors. Food prices is just one of the key factors. Importing to reduce price levels is good for all consumers. Why are you complaining. Are you living overseas?

    Ruwani Tuesday, 11 January 2011 08:08 AM

    This news could be nice ,if sri lanka whole bank give Housing loan and credit just for 7.5%; Even europe countrys give housing loan just for 3.% ,Hense here many of them lving happy with incoming money. ,in sri lanka whole bank loans and leasing to much high, threfore no body can out of trables. if Goverment do so,then don't need to do much help for the peoples, Finaly each sri lankan have home and any kind of bisnuss for export and bring money for our country.

    Keith Tuesday, 11 January 2011 07:45 AM

    A drop in lending rates benefits almost everyone.. specially for the SME's and the ones who have their own businesses.. This is good for growth.

    Viraj Tuesday, 11 January 2011 07:26 AM

    There is no necessity to force the banks to reduce the interest rate. When a one bank tries to exploit the lower interest rate, to grow their loans portfolio, others will definitely follow it in order to protect and grow their portfoloios.

    CB should only involve if there is a cartel in the banking system. In this case there is no cartel.

    tissa Tuesday, 11 January 2011 07:23 AM

    Everybody says the politicians of all colours are corrupt. I would like to see those people who make these allegations come out with concrete evidence so that the people will believe them. Otherwise people will continue to look at them with suspicion branding them as bias and crying foul for cheap publicity.

    dutugemunu Tuesday, 11 January 2011 07:17 AM

    Only Beneficiary will be the Banks who are making Hefty Profits !!1

    Sujith Tuesday, 11 January 2011 04:53 AM

    Good for wealthy ones, not for poor ones

    nihal Tuesday, 11 January 2011 06:47 AM

    This is a good move. however, Without eliminating corruption specially by the politician since they are doing in large scale, you can’t expect any meaningful growth or improvement in this country

    malkanthi Tuesday, 11 January 2011 06:30 AM

    This will happen in the near future when all investments come to a standstill, just like waiving off taxes to reduce inflation!

    DineshPerera Tuesday, 11 January 2011 06:30 AM

    The government must also compel banks to reduce the lending rates! Otherwise the ultimate beneficiary of all this will be the banks as always, a sector who has been minting money even in the worst economic conditions!

    NAIDE Tuesday, 11 January 2011 05:46 AM

    WHY NOT DECLARE AN INTEREST FREE ZONE.

    Ravana Tuesday, 11 January 2011 05:44 AM

    The banks have to pass this on to the public not continue to bump up their profits by charging punitive rates from the customers.

    summa Tuesday, 11 January 2011 05:44 AM

    Its a good move....
    However...there should be some mechanism to support senior citizens living with bank interest as informing them to move to share market etc. is not going to work.

    Prabhath Patabendi Tuesday, 11 January 2011 05:42 AM

    Good move but make a clear policy. Direct all commercial banks to follow you and pass the benefit to the customers

    scrap_metal Tuesday, 11 January 2011 05:30 AM

    its good for all of us...

    Economist Tuesday, 11 January 2011 05:26 AM

    Good move but this benefit should immediately available to public

    This may result in further reduction in the inflation but not sure about the current inflation rates. Probably it should be higher as per my knowledge.

    Any way good move by the gov.

    malkanthi Tuesday, 11 January 2011 05:01 AM

    Why CB reluctant to state on increasing inflation, but trying to camouflage with various dubious statements, which is obvious to all. Importing some essential items which has no impact on economy does not mean inflation has ceased.


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