Sri Lanka's Central Bank keeps rates unchanged

The Central Bank of Sri Lanka announced on Wednesday that it has decided to keep its rates unchanged, citing increased foreign currency inflows and controlled inflation. The monetary report released by the Central Bank noted that the decision was made to maintain the Repurchase rate and the Reverse Repurchase rate of the Central Bank of Sri Lanka without change at 7 percent and 9 percent, respectively. Headline inflation for June eased to 6.8 percent year-on-year from 7.3 percent in May, while core inflation continued to decrease in June year-on-year to record the lowest figure since its inception, according to the Central Bank. "Core inflation for June was 4.3 percent, down from 5.7 percent in May 2013. Looking ahead, inflation, subject to minimal seasonal variations, is expected to remain at single digit levels for the remainder of the year supported by improved inflation expectations, supply side improvements and the absence of demand driven inflationary pressures," the report added. Recent monetary policy relaxation is also expected to increase loans to private sector and boost growth. "However, as per the revised global economic outlook of the IMF, weaker than expected economic performance in advanced economies may yet prove to be a dampener in revitalizing external demand and would need to be watched carefully in the months ahead," the monetary organization cautioned. Sri Lanka's economy is expected to grow by 6.8 percent this year, according to the International Monetary Fund (IMF).