CB sees no overheating despite lower rates

Saturday, 5 July 2014 02:15 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka’s economy can achieve its growth target this year without risk of overheating, Central Bank Governor Ajith Nivard Cabraal said on Friday, despite interest rates at multi-year lows.

Central Bank Governor Ajith Nivard Cabraal

The Central Bank has been maintaining low interest rates since January and yields in Government treasuries have also dropped to multi-year lows. The country’s economy expanded 7.6% in the first quarter of this year, slowing from 8.2% in the previous quarter. The Central Bank has estimated growth of 7.8% for 2014, higher than last year’s 7.3%. “Such growth is satisfactory and could be achieved without any risk of overheating according to our current estimates. Hence, we do not see a need to become more aggressive,” Cabraal told a Reuters market forum. Moody’s Investors Service, while keeping a stable outlook for Sri Lanka’s banking system, said on Thursday that the economy remains one of Asia’s fastest-growing economies. Srikanth Vadlamani, a Moody’s Vice President and Senior Analyst, said in a statement it estimated loan growth of 14% this year which it does not view as excessive. Sri Lanka’s economy achieved record growth of 8.2% in 2011 due to higher credit growth and imports, backed by low interest rates and a firm rupee. However, the Central Bank had to tighten monetary policy, devalue its currency and allow for a flexible exchange rate to cool down the economy. Growth slowed to a three-year low of 6.4% in 2012.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.