Sri Lanka's central bank keeps rates unchanged

Sri Lanka's central bank has decided to maintain current policy interest rates as headline inflation had declined to its lowest level in October 2014 since November 2009, the institution said here on Wednesday.

Accordingly, the Standing Deposit Facility Rate (Repurchase Rate) would remain at 6.50 percent while the Standing Lending Facility Rate (Reverse repurchase Rate) remains at 8.00 percent, the central bank announced.

Statutory Reserve Ratio (SRR), the commercial banks' deposit requirement remains at 6.00 percent.

The recent reduction in domestic energy prices led to the lowest inflation of 1.6 percent in October 2014 compared to 3.5 per cent in the previous month.

The central bank expects the subdued commodity prices in the international markets, recent budget proposals such as reducing the Value Added Tax (VAT) to 11 percent and stable inflation expectations to keep inflation at benign levels in the period ahead.

"Sri Lanka rupee remained broadly stable supported by foreign currency inflows mainly on account of export earnings, tourism, remittances, and other inflows to the banking sector," the bank said in a statement.

Accordingly, the gross official reserves stood at an estimated 8.8 billion U.S. dollars.

In this background, the Monetary Board has decided that the current monetary policy stance of the central bank is appropriate.