CB leaves policy rates unchanged

12 November 2013 02:30 am - 0 - {{hitsCtrl.values.hits}}

A A A

The Central Bank (CB) yesterday kept the policy rates on hold for the month of November, providing a breather to the recent monetary easing to take effect during the next few months.

In October, the CB surprised the markets by cutting both the Repurchase rate and the Reverse Repurchase rate by 50 basis points to multi-year lows of 6.50 percent and 8.50 percent, respectively, amidst calls by the International Monetary Fund (IMF) to hold the rates over inflationary fears.

“We believe the time has come for the monetary policy measures that have already been taken to take effect and we also believe within the next few months these changes would hold the economy in the growth momentum. So, we don’t think of any further changes now,” Central Bank Governor Ajith Nivard Cabraal told Bloomberg TV.

However, Cabraal noted that despite the short-term interest rates have already started to come down significantly, easing of medium and longterm rates has been rather slow.

Despite the recent monetary easing, the private sector credit growth remained below 10 percent during the year so far. The private sector credit grew by 34.5 percent in 2011, followed by another 23 percent in 2012.

In September, domestic commercial banks have disbursed as much as Rs.20 billion worth of private sector credit. “September figures were rather encouraging, so have the October figures been,” Cabraal remarked.

The broad money supply (M2b) in September increased to 16.3 percent from last year, up from 15.3 percent in August. The projected M2b for 2013 is 15 percent. In 2012, it was 16.2 percent.

Cabraal said the macroeconomic fundamentals are strong and the inflation is under control. But October inflation proved otherwise with the headline inflation rising to 6.7 percent, picking up from 6.2 percent a month earlier.

However, sending some level of certainty into the financial markets Cabraal said, “Next three to four months we will probably see consolidation of policy we have been advocating because we are satisfied with the results we have seen.

I don’t see a major shift in the policies during this period because whatever required has already been done,” he emphasized.

Since last December, the CB has cut policy rates by 125 basis points, reduced the statutory reserves ratios of the commercial banks by 2 percent and also asked the financial sector to reduce the penal interests charged on the default loans, in order to oil the slow-moving economic wheels.

“We would be a little dovish than hawkish. But we will watch the December and January figures quite carefully whether they are in place with what we have in mind for 2014,” Cabraal said.

Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

Comments - 0

Add comment
Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

CB leaves policy rates unchanged

Comments - 0

Add comment

RECOMMENDED

‘Spike in blast fishing’ poses renewed threats to Sri Lanka’s marine ecosystems

UDA owned land in Thalawathugoda; UDA Minister Prasanna Ranatunga under the spotlight for forceful occupation of reserved land

Loss-making SMIB faces political pressure in recovering loans

Baltimore Bridge Collapse: MV Dali, SL authorities anchored in mystery?

Has Sri Lanka become a potential hub for the illegal wildlife trade?

Spotlight on Moragahakanda Development Project Moragolla villagers lose livelihoods and down to one meal a day

Ambitious Sri Lankan jobseekers ‘trafficked into Ukraine war zones’

Most Viewed in News

Street food vendor arrested for verbally harassing foreigner

SL on alert on possible genocide allegations by Canada

Two racing drivers arrested over Fox Hill tragedy

New Visa procedure implemented

Complaint lodged over Piumi Hansamali's possession of Gota’s Range Rover

Racing event tragedy leaves seven dead including eight-year-old child

MIRROR CRICKET

Is Chamari Athapaththu Sri Lanka’s greatest cricketer ever?

Athapaththu back atop ICC Women’s ODI Batting Rankings

Chamari Athapaththu sets big goal for T20 World Cup

How does CSK get best out of Pathirana?

TODAY'S HEADLINES

No footboard riding allowed, no liability for accidents: Railways Department

Six patients claim Rs.600 million from Keheliya and others for permanent loss of sight

SLPP, UNP initiates action for forming broad alliance

Here is the way!

Pakistan lose key players for last two T20Is against New Zealand

Sri Lanka secures third spot in South Asian Kurash Championship 2024

Athapaththu back atop ICC Women’s ODI Batting Rankings

Army forms committee to probe Diyatalawa Fox Hill Supercross accident