Policy measures adopted supportive:
Inflation to remain at subdued levels -Central Bank
Worldwide inflation is expected to pick up moderately in the ensuing
months with the base effects of last year’s high consumer prices driven
by the commodity price bubble wearing out, as well as firming demand
alongside the nascent recovery in global markets.
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The Central
Bank |
Nevertheless, inflation in Sri Lanka is expected to be at subdued
levels in the coming months, with current inflation remaining at around
one percent during the four months up to September 2009, a media release
from the Central Bank said.
So far during the year, market interest rates have gradually declined
in response to the monetary policy relaxation measures of the Central
Bank, but are yet to adjust fully to such measures. Benchmark yield
rates on Treasury bills have declined significantly by around 800 - 865
basis points since the end of last year, by the first week of October
this year. The Central Bank expects the downward movement of the
benchmark yield rates to permeate to other market interest rates over
the coming weeks, further reducing the borrowing costs of economic
agents.
This, together with the improved outlook for economic activity, is
expected to underpin an expansion in credit utilisation of the private
sector, thereby supporting enhanced economic performance.
Accordingly, the Monetary Board is of the view that the current
levels of policy interest rates do not require any adjustment at the
present time, since the policy measures adopted so far are still
supportive of the desired outcome of gradual easing of the credit
conditions in the country, the release said.
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