Monetary Board ups repo/reverse interest rates

The Monetary Board last week raised Repurchase (Repo) rate and Reverse Repurchase (Reverse Repo) rates by 50 basis points to 9.625 per cent and 11.125 per cent, respectively, after observing excessive borrowing trends that could fuel inflation.

In a statement, the board said that while the Sri Lankan economy was growing at 8 per cent and external reserves were at a satisfactory level, inflation hasn’t declined to a satisfactory rate as yet. “Further, the Board witnessed an unusual increase in lending by commercial banks and substantially higher borrowings from the Central Bank through the reverse repurchase window. Such excessive borrowings have led to added inflationary pressures,” it said.