The central bank of Sri Lanka decided today to keep interest rates steady at the lowest record since November 2004 for the fourth straight meeting, hoping to support economic recovery after the civil war the lasted 26 years, noteworthy that the bank's decision came meeting forecasts.
Sri Lanka's central bank kept the repurchase rate at 7.5%, while the reverse repo rate was kept at 9.75% the lowest in five years.
However, the bank's decision came days before the parliamentary elections that is supposed to take place in April, and the current government is trying to win a new term. The government is working to provide jobs to increase its chances in winning the elections, after the end of civil war.
Sri Lanka's president Mahinda Rajapaksa said he is working to accelerate growth to 7% this year, and he pledged to spend $1 billion on the infrastructure such as ports, roads, and power stations that will support economic growth.
Analysts expect Governor Cabral to keep rates steady in the upcoming period to support economic recovery, especially with inflation rate us half the average between 2004 and 2009. The central bank expects inflation to moderate in the next few months alongside improving conditions and measures taken to reduce inflationary pressures.
Moreover, the central bank said the main sectors' performance is improving that was reflected on domestic demand, worth mentioning that the International Monetary Fund signaled the monetary policy set by Sri Lanka's central bank is consistent amid weak demand.
Consumer prices rose 6.9% in February from a year earlier showing accelerating inflation, keeping in mind that the central bank aims at keeping inflation rate below 10% giving a chance for monetary policy makers to keep rates steady today.
Governor Cabral expects the average inflation rate to remain between 5% and 6% this year, while he expected the economy to grow 7% in 2010 that would be the fastest pace in four years.
Sri Lanka's central bank kept the repurchase rate at 7.5%, while the reverse repo rate was kept at 9.75% the lowest in five years.
However, the bank's decision came days before the parliamentary elections that is supposed to take place in April, and the current government is trying to win a new term. The government is working to provide jobs to increase its chances in winning the elections, after the end of civil war.
Sri Lanka's president Mahinda Rajapaksa said he is working to accelerate growth to 7% this year, and he pledged to spend $1 billion on the infrastructure such as ports, roads, and power stations that will support economic growth.
Analysts expect Governor Cabral to keep rates steady in the upcoming period to support economic recovery, especially with inflation rate us half the average between 2004 and 2009. The central bank expects inflation to moderate in the next few months alongside improving conditions and measures taken to reduce inflationary pressures.
Moreover, the central bank said the main sectors' performance is improving that was reflected on domestic demand, worth mentioning that the International Monetary Fund signaled the monetary policy set by Sri Lanka's central bank is consistent amid weak demand.
Consumer prices rose 6.9% in February from a year earlier showing accelerating inflation, keeping in mind that the central bank aims at keeping inflation rate below 10% giving a chance for monetary policy makers to keep rates steady today.
Governor Cabral expects the average inflation rate to remain between 5% and 6% this year, while he expected the economy to grow 7% in 2010 that would be the fastest pace in four years.
