Sri Lanka expected to keep rates unchanged: Reuters poll
COLOMBO, Sept 26 (Reuters) – Sri Lanka’s central bank is
expected to keep its key interest rates steady on Wednesday,
after cutting three times since December to fend off pressure on
the fragile rupee currency and curb accelerating credit growth
that has pushed up inflation.
All 13 economists surveyed in a Reuters poll expect the
central bank to keep its standing deposit facility rate (SDFR)
steady at 7.00 percent, and its standing lending facility rate
(SLFR) unchanged at 8.50 percent.
Danushka Samarasinghe, research head at Softlogic
Stockbrokers, said the lag effect of previous rate increases
meant "the central bank will wait for another month or two
before taking any further action."
Private sector credit growth hit a near four-year high of
28.2 percent in June, and central bank chief Indrajith
Coomaraswamy expects credit growth to slow to 18 percent by the
end of 2016.
The sizzling credit growth has kept inflation high, though
it slowed in August to 4.0 percent on-year from the previous
month’s 5.5 percent.
The rupee has come under pressure due to lower interest
rates, higher imports, and foreign outflows from government
securities last year. But the currency steadied after the
central bank raised $1.5 billion from a sovereign bond sale in
The International Monetary Fund (IMF) on Friday welcomed the
central bank’s preemptive move to raise policy rates to maintain
inflation within its target band.
The central bank has raised both the SDFR and the SLFR by 50
bps each in February and July. That followed an increase of 150
bps in commercial banks’ statutory reserve ratio (SRR) in
All 13 economists expect the statutory reserve ratio (SRR)
to remain at 7.50 percent.
Following are poll forecasts for rates on Tuesday:
SDFR SLFR SRR
(in pct) (in pct) (in pct)
Median 7.00 8.50 7.50
Average 7.00 8.50 7.50
Minimum 7.00 8.50 7.50
Maximum 7.00 8.50 7.50
Rates in August 7.00 8.50 7.50
No. of economists 13 13 13