Inflation remains unchanged

The Monetary Board, has decided to maintain its current monetary policy stance unchanged to support economic activity.

Annual average inflation has remained unchanged at 3.1 percent. Inflation as measured by the year-on-year increase in the Colombo Consumers' Price Index (base-2002) has increased marginally to 6.9 percent in February from 6.5 percent in January.

Inflation in Sri Lanka is expected to remain subdued in the coming months due to improvements in supply conditions and several policy measures taken to ease price pressures, the Central Bank said.

The performance in key sectors indicates a gradual recovery in the domestic economy.

The performance in the Industry and Services sectors as well as the strong performance in the Agriculture sector have raised the prospects for higher economic growth in 2010, while increased activity in the stock market reflects heightened investor confidence in the domestic economy.

The financial system has also improved its soundness and profitability despite challenging global and domestic conditions.

Market interest rates continue to adjust in response to the Central Bank's monetary policy easing, which continued through 2009.

Interest rates across many market segments have shown a considerable decline thus far, which is expected to have a favourable impact on credit flows.