Central Bank maintains interest rates, current monetary policy
The Central Bank has decided to maintain current policy interest
rates as its Monetary Board is of the view that the current monetary
policy stance is appropriate. Following its monthly Monetary Board
meeting held on Monday, the Central Bank said the repurchase rate would
remain at 7.50 percent while the reverse repurchase rate remains at 9.50
The current tight policy measures adopted in early 2012, to moderate
private sector credit expansion proved effective, the Central Bank said
in its Monetary Policy Review for February 2013. The tight policy
measures resulted in a marked decline in non-oil imports, narrowing the
deficit in the trade account in 2012.
Private sector credit growth declined to 17.6 percent by end 2012,
from 34.5 percent at end 2011, although the government and public
corporations borrowing from banks remained at 21.7 percent at end 2012.
Since the objectives of the tight measures have been realized, the
Central Bank had relaxed the policies somewhat from December 2012, to
boost the economic growth.
The Bank expects the reduction in policy interest rates and the
expiration of the credit ceiling in December 2012, to support the
economy to move towards its full potential in 2013.
While inflation remained at single digit levels over the past four
years, it rose to 9.8 percent year-on-year, in January 2013.
The Central Bank attributed the rise in inflation to the adverse
weather conditions affecting vegetable prices. The Bank expects the
inflation to remain the same for February and decline later.