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Sri Lanka Central Bank increases reserve ratios

Sri Lanka Central Bank's Monetary Board on Wednesday has decided to maintain policy interest rates but to increase the Statutory Reserve Ratio (SRR) applicable to all rupee deposit liabilities of commercial banks by 1.50 percentage points to 7.50 per cent to be effective from the reserve week commencing 16 January 2016.

The measures has been taken to restrain the build-up of demand-side pressure on inflation to ensure continued monetary and price stability, the Bank said.

The Monetary Board has decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 percent and 7.50 percent, respectively.

Sri Lanka's inflation measured by the Colombo Consumers' Price Index, increased to 3.1 percent, on a year-on-year basis, in November 2015 from 1.7 percent in October 2015.

On the external front, the decline in expenditure on imports in October 2015 was greater than the decline in earnings from exports, narrowing the deficit in the trade account by 6.8 per cent, on a year-on-year basis, to US dollars 791 million. However, on a cumulative basis, the trade deficit during the first ten months of the year widened by 2.5 per cent to US dollars 6,936 million reflecting the continued increase in non-oil imports.
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