Central Bank of Sri Lanka stands pat on interest rates

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The Central Bank of Sri Lanka left key interest rates unchanged on Tuesday as inflation gauges point to continued deceleration toward a target range in the mid-single digits.

The bank kept its standing deposit facility rate at 7.25 per cent and its standing lending facility rate at 8.75 per cent – in line with forecasts from five out of six analysts polled by Bloomberg – on the view “that the current monetary policy stance is appropriate.”

In its decision the bank cited slowing consumer inflation, as reflected by deceleration to 6.9 per cent headline price growth and 6.8 per cent core inflation in April’s Colombo Consumer Price Index. It predicted the official CPI would show a similar trend for April.

“Supported by monetary policy adjustments from end 2015, inflation is projected to decelerate gradually to the desired mid-single digit levels by end 2017,” the bank said, “although there could be some monthly fluctuations due to short term supply side disruptions and the base effects of tax revisions in 2016.”

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