Monetary Policy Review – Aug 2017
Policy rates unchanged
- The recovery of the agriculture related activities and the positive performance of the industry and services related activities together with the reinstatement of GSP+ facility are expected to contribute to economic growth. Headline inflation moderated at a faster pace to 4.8% in Jul 2017.
- Private sector credit growth further decelerated to 18.6% in June 2017 compared to 18.9% in May 2017 owing to high nominal and real interest rates prevailed in the market.
- Despite improved export performance, a sustained increase in import expenditure resulted in a trade deficit of USD 4.2Bn till May 2017
- Gross official reserves dipped to USD 6.7Bn in July from USD 7.0Bn in Jun 2017. Sri Lanka received the third tranche of the IMF-Extended Fund Facility (EFF) amounting to USD 167.2Mn. Both the government securities market and the Colombo Stock Exchange experienced noticeable foreign inflows.
- Accordingly policy rates were decided to be maintained at,
- Standing Deposit Facility Rate – 7.25%
- Standing Lending Facility Rate – 8.75%
- Statutory Reserve Ratio (SRR) – 7.50%
Read the full report here: Monthly Economic Watch – August 2017
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