Sri Lanka's central bank on Tuesday decided to leave its key policy rates unchanged, saying an increase in inflation was due to adverse weather conditions and resulting disruptions to domestic food supplies.
The bank maintained the Repurchase rate at 7.75 percent and the Reverse Repurchase rate at 9.75 percent. The decision came in line with economists' expectations.
"The current macroeconomic developments and the impact that the recent policy actions are already having on the external and monetary sector, the Monetary Board of the Central Bank of Sri Lanka was of the view that the current monetary policy stance is appropriate," the bank said in a statement.
Inflation accelerated in July reflecting adverse weather conditions. Nonetheless, inflation is expected to remain at single digit throughout the year due to an improvement in domestic supply conditions and measures already taken to contain inflationary pressure.
The global economic conditions continue to worsen. But these negative conditions are unlikely to affect the local economy more than that was anticipated at the time of revising the economic growth forecast for 2012 downward to 7.2 percent.
The board assessed that the economy is on track to realize the macroeconomic targets.
by RTT Staff Writer
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