REUTERS: Sri Lanka’s Central Bank is expected to keep its key policy interest rates unchanged at record lows yesterday, a Reuters poll showed, ahead of a parliamentary polls in August.
Central Bank Governor Arjuna Mahendran earlier this month said the monetary authority is likely to keep key monetary policy rates steady until Aug. 17 parliamentary polls, but there could be a significant cut later if a stable government is elected.
The Central Bank in April surprised markets with a 50 basis point cut to boost economic growth. Until April, rates were steady for 14 months.
Twelve out of 13 analysts said they expect the Central Bank to leave the repurchase rate or standing deposit facility rate (SDFR) at 6.00 percent, the reverse repurchase rate or standing lending facility rate (SLFR) at 7.50 percent, and the statutory reserve ratio (SRR) for commercial banks at 6.00 percent.
One analyst expected the Central Bank to raise both the SDFR and SLFR by 25 basis points amid heavy government borrowing, though he predicted the central bank will keep the SRR steady.
Sri Lanka’s economy grew at an annual 6 percent in the first quarter of this year, according re-based data introduced this month. The economy grew at 4.5 percent last year, compared to
3.4 percent in 2013. The Central Bank is yet to release the 2015 estimate using the new base year.