CB seen keeping rates steady

29 June 2015 06:27 am

REUTERS: Sri Lanka’s Central Bank is expected to keep its key policy interest rates unchanged at record lows on Monday, a Reuters poll showed.
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.

Eleven out of 12 analysts said they expected 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 cut 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 6.4 percent in the first quarter of this year, the same pace as in the last three  months of 2014.

The Central Bank has forecast 7 percent growth this year, while the Finance Ministry sees 7.2 percent, compared with 7.4 percent last year.

Analysts say the Central Bank cut policy rates in April to reduce debt-repayment costs for the government, which is heavily dependent on local borrowing at a time approval of some revenue bills has been delayed.