The Central Bank of Sri Lanka (CBSL) today said its 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 per cent and 7.50 per cent, respectively.

Releasing the Monetary Policy Review for November 2015, the CBSL said that in the monetary sector, the year-on-year growth of credit granted to the private sector by commercial banks increased further to 22.2 per cent in September 2015 from 21.3 per cent in the previous month. On the external front, the CBSL said that recent policy measures taken by the Central Bank and the government coupled with policy measures announced in the Budget for 2016 are expected to curtail certain imports, particularly motor vehicles, thereby easing the pressure on the external sector.

“As per the Quarterly Survey of Commercial Banks’ Loans and Advances to the Private Sector, the Services and Industry sectors witnessed the highest intake of credit, recording year on year increases of 40.6 per cent and 24.5 per cent, respectively. Broad money (M2b) grew by 16.0 per cent (y-o-y) in September 2015 compared to 16.8 per cent in the previous month driven by the expansion of credit extended to both private and public sectors by the banking system,” the CBSL said.

Headline inflation, as measured by the Colombo Consumers’ Price Index (CCPI, 2006/2007=100), increased to 1.7 per cent on a year-on-year basis in October 2015 from negative 0.3 per cent in September 2015 mainly reflecting the dissipation of the impact of the downward revision of administered prices during the latter part of 2014.

On an annual average basis, headline inflation remained unchanged at 0.7 per cent in October 2015. However, reflecting the firming up of aggregate demand conditions in the economy, core inflation continued to increase during last eight months reaching 4.4 per cent in October 2015, on a year-on-year basis, compared to 3.2 per cent recorded at end 2014.

In the meantime, the Department of Census and Statistic (DCS) released a National Consumer Price Index (NCPI, 2013=100) on 23 November 2015 covering price movements in all provinces in the country. The movements of the NCPI are broadly in line with the movements in CCPI, which only covers the urban areas of the Colombo district.

Headline inflation as per the year-on-year change in NCPI was at 3.0 per cent for October 2015.

With regard to the external sector, the decline in expenditure on imports in September 2015 was greater than the decline in earnings from exports, narrowing the deficit in the trade account by 4.1 per cent to US dollars 733 million. However, on a cumulative basis, trade deficit widened during the first nine months of the year by 3.8 per cent to US dollars 6,145 million, driven by the continued increase in non-oil imports.