Sri Lanka's central bank left its key interest rates unchanged despite weak economic growth and higher inflation.
The monetary board of the Central Bank of Sri Lanka decided to keep the Standing Deposit Facility Rate and the Standing Lending Facility Rate steady at 7.00 percent and 8.00 percent, respectively, the bank said in a statement on Friday.
The bank had reduced the rate by 50 basis points each in May and August.
The economic growth eased to 1.6 percent in the second quarter as the Easter Sunday attacks weighed heavily on the service sector activity. The central bank forecast economic growth to remain subdued this year but a gradual recovery is expected over the medium term.
Further, the bank expects inflation to stabilize well within the desired range of 4-6 percent with transitory supply side price pressures easing.
The vulnerability of the currency is likely to be a key barrier to looser policy in the near term, Alex Holmes, an economist at Capital Economics, said.
Global sentiment should start to improve around the middle of next year, and this could allow the central bank to cut interest rates further, Holmes noted. The economist expects a 50 basis point reduction in the second half of next year.
The material has been provided by InstaForex Company - www.instaforex.com
source http://www.mt5.com/forex_news/quickview/2144550/
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