Sri Lanka's central bank will likely leave its key interest rates on hold at a policy review on Friday, after a 50-basis-point cut in August, a Reuters poll showed, ahead of presidential elections and as lower bank rates go into effect.

Central bank chief Indrajit Coomaraswamy told Reuters after the last policy rate decision that it "is extremely unlikely to reduce" the key monetary policy rates before presidential elections to be held on November&nbsp;16.

All 13 economists surveyed by Reuters expected the central bank of Sri Lanka to keep both its standing deposit facility rate (SDFR) and standing lending facility rate (SLFR) steady at7.00% and 8.00%, respectively. All predicted the statutory reserve ratio (SRR) would also be kept at 5.00%.

The central bank has loosened policy in several steps to boost sluggish growth after tourism and investments plummeted in Sri Lanka following deadly Easter Day bomb attacks by Islamist militants

The central bank cut rates by 100 bps in two meetings since May, reduced the SRR by 250 bps, releasing around 150 billion rupees ($832 million) of liquidity to the financial market. It also imposed caps on rupee deposit interest rates that enabled banks to reduce the cost of mobilising funds from the general public.

As a result, the commercial banks' average weighted prime lending rate (AWPR) has fallen 136 basis points as of October 2.

The Monetary Board last month ordered banks to reduce interest rates on all rupee-denominated loans by at least 200 basis points by October 15, from levels in April.

"Since the central bank's objective of reducing market lending rates are expected to take effect with lending rate caps, another rate cut is unwarranted," said Danushka Samarasinghe, CEO at Softlogic Capital Markets.

The rate cuts have already put pressure on the rupee currency, which has fallen 2.2% amid foreign outflows from government securities.

The attacks on luxury hotels and churches on April 21 killed more than 250 people, and private sector credit growth remains sluggish.

The island nation's economic growth eased to a 17-year low of 3.2% in 2018 and the IMF expects the pace to slow to 2.7% this year. A Reuters poll has predicted 2019 growth will be the lowest in nearly two decades.,

The government's finances, meanwhile, remain under pressure with a heavy external debt repayment schedule between 2019 and 2022.

Sri Lanka's central bank will likely leave its key interest rates on hold at a policy review on Friday, after a 50-basis-point cut in August, a Reuters poll showed, ahead of presidential elections and as lower bank rates go into effect.

Sri Lanka's central bank will likely leave its key interest rates on hold at a policy review on Friday, after a 50-basis-point cut in August, a Reuters poll showed, ahead of presidential elections and as lower bank rates go into effect. Central bank chief Indrajit Coomaraswamy told Reuters after the last policy rate decision that it "is extremely unlikely to reduce" the key monetary policy rates before presidential elections to be held on November 16. All 13 economists surveyed by Reuters expected the central bank of Sri Lanka to keep both its standing deposit facility rate (SDFR) and standing lending facility rate (SLFR) steady at7.00% and 8.00%, respectively. All predicted the statutory reserve ratio (SRR) would also be kept at 5.00%. The central bank has loosened policy in several steps to boost sluggish growth after tourism and investments plummeted in Sri Lanka following deadly Easter Day bomb attacks by Islamist militants The central bank cut rates by 100 bps in two meetings since May, reduced the SRR by 250 bps, releasing around 150 billion rupees ($832 million) of liquidity to the financial market. It also imposed caps on rupee deposit interest rates that enabled banks to reduce the cost of mobilising funds from the general public. As a result, the commercial banks' average weighted prime lending rate (AWPR) has fallen 136 basis points as of October 2. The Monetary Board last month ordered banks to reduce interest rates on all rupee-denominated loans by at least 200 basis points by October 15, from levels in April. "Since the central bank's objective of reducing market lending rates are expected to take effect with lending rate caps, another rate cut is unwarranted," said Danushka Samarasinghe, CEO at Softlogic Capital Markets. The rate cuts have already put pressure on the rupee currency, which has fallen 2.2% amid foreign outflows from government securities. The attacks on luxury hotels and churches on April 21 killed more than 250 people, and private sector credit growth remains sluggish. The island nation's economic growth eased to a 17-year low of 3.2% in 2018 and the IMF expects the pace to slow to 2.7% this year. A Reuters poll has predicted 2019 growth will be the lowest in nearly two decades., The government's finances, meanwhile, remain under pressure with a heavy external debt repayment schedule between 2019 and 2022.

Sri Lanka central bank seen keeping rates on hold ahead of elections

Sri Lanka's central bank unexpectedly slashed banks' statutory reserve ratio on Friday to spur credit growth as <a href="http://www.wionews.com/south-asia/sri-lanka-secures-1-billion-chinese-loan-156873">policymakers struggle to boost the island's faltering economy</a> after a political crisis.

Economic growth cooled to a 17-year low of around 3 per cent in 2018, central bank Governor Indrajit Coomaraswamy said after the policy decision, adding that it will pick up to about 4 per cent this year.

The Central Bank of Sri Lanka (CBSL) cut the statutory reserve ratio (SRR) by 100 basis points to 5 per cent effective March 1, while leaving its two key monetary policy rates steady, saying they were "appropriate". Analysts polled by Reuters had expected all three to be left unchanged.

The SRR cut would inject 60 billion rupees (334.45 million) into the financial system, the central bank said.

"The (Monetary) Board was of the view that some policy intervention by the Central Bank to address the large and persistent liquidity deficit in the domestic money market is warranted," the central bank said in a statement.

It said liquidity has remained tight despite a 150 bps cut in the statutory reserve ratio in mid-November.

Private-sector credit grew 15.9 per cent in December from a year earlier, slowing from a 16.2 per cent pace in December 2017, central bank data showed.

"The surprise cut appears to be targeted at addressing the persistent liquidity deficit issues faced by banks over the last few quarters, rather than an active signal of monetary easing," said Trisha Peries, product head of economic research at Frontier Research.

Sri Lanka started discussions with the International Monetary Fund (IMF) last week on extending a $1.5 billion loan.

The talks were delayed after a political crisis erupted in October.

President Maithripala Sirisena's abrupt change of prime minister and decision to dissolve parliament created panic and uncertainty among investors, who dumped Sri Lankan government bonds and other assets, sending the rupee currency to record lows.

The move was later ruled unconstitutional and Ranil Wickremesinghe was reinstated as prime minister after 51 days.

Analysts who had expected no change in the central bank's stance had pointed to an easing of political and financial market pressure.. The rupee has rebounded 1.8 per cent against the dollar since hitting an all-time low of 183.00 on Jan. 3, while foreigners have resumed buying government bonds.

Wickremesinghe's government aims to focus on economic growth, which has been sluggish due to tight policies, ahead of a presidential poll later this year and general election in 2020.

Coomaraswamy also said the central bank "is doing the paperwork" on a yuan swap agreement with the People's Bank of China equivalent to $1.5 billion, along with a $400 million swap from Reserve Bank of India and another from Qatar as Sri Lanka struggles to repay a record $5.9 billion foreign loan due this year.

Sri Lanka's central bank unexpectedly slashed banks' statutory reserve ratio on Friday to spur credit growth as policymakers struggle to boost the island's faltering economy after a political crisis.

Sri Lanka's central bank unexpectedly slashed banks' statutory reserve ratio on Friday to spur credit growth as policymakers struggle to boost the island's faltering economy after a political crisis. Economic growth cooled to a 17-year low of around 3 per cent in 2018, central bank Governor Indrajit Coomaraswamy said after the policy decision, adding that it will pick up to about 4 per cent this year. The Central Bank of Sri Lanka (CBSL) cut the statutory reserve ratio (SRR) by 100 basis points to 5 per cent effective March 1, while leaving its two key monetary policy rates steady, saying they were "appropriate". Analysts polled by Reuters had expected all three to be left unchanged. The SRR cut would inject 60 billion rupees (334.45 million) into the financial system, the central bank said. "The (Monetary) Board was of the view that some policy intervention by the Central Bank to address the large and persistent liquidity deficit in the domestic money market is warranted," the central bank said in a statement. It said liquidity has remained tight despite a 150 bps cut in the statutory reserve ratio in mid-November. Private-sector credit grew 15.9 per cent in December from a year earlier, slowing from a 16.2 per cent pace in December 2017, central bank data showed. "The surprise cut appears to be targeted at addressing the persistent liquidity deficit issues faced by banks over the last few quarters, rather than an active signal of monetary easing," said Trisha Peries, product head of economic research at Frontier Research. Sri Lanka started discussions with the International Monetary Fund (IMF) last week on extending a $1.5 billion loan. The talks were delayed after a political crisis erupted in October. President Maithripala Sirisena's abrupt change of prime minister and decision to dissolve parliament created panic and uncertainty among investors, who dumped Sri Lankan government bonds and other assets, sending the rupee currency to record lows. The move was later ruled unconstitutional and Ranil Wickremesinghe was reinstated as prime minister after 51 days. Analysts who had expected no change in the central bank's stance had pointed to an easing of political and financial market pressure.. The rupee has rebounded 1.8 per cent against the dollar since hitting an all-time low of 183.00 on Jan. 3, while foreigners have resumed buying government bonds. Wickremesinghe's government aims to focus on economic growth, which has been sluggish due to tight policies, ahead of a presidential poll later this year and general election in 2020. Coomaraswamy also said the central bank "is doing the paperwork" on a yuan swap agreement with the People's Bank of China equivalent to $1.5 billion, along with a $400 million swap from Reserve Bank of India and another from Qatar as Sri Lanka struggles to repay a record $5.9 billion foreign loan due this year.

Sri Lanka central bank cuts banks' liquidity ratio to spur loan growth

The new head of Sri Lanka&#39;s central bank Indrajit Coomaraswamy pledged on Monday to uphold its credibility after allegations of insider dealing that forced his predecessor to leave. 
 
Sri Lanka&#39;s president bowed to pressure to replace Arjuna Mahendran after he was accused of leaking information to his son-in-law&#39;s firm, which allegedly made millions of dollars in profits from central bank bond auctions. 
 
The scandal came with Sri Lanka&#39;s economy under stress -- last month the country began receiving a $1.5 billion bailout from the International Monetary Fund. 
 
On Monday Coomaraswamy told staff the bank was &quot;one of the great institutions in this country&quot;. 
 
&quot;I am acutely aware that a primary responsibility, arguably the primary responsibility of the governor, is to uphold this reputation and credibility,&quot; said the 66-year-old former director of economic affairs at the Commonwealth Secretariat, an intergovernmental agency of&nbsp;Commonwealth countries in London. 
 
&quot;I can assure you that I will do my utmost to do so at all times.&quot; 
 
Mahendran, a Singaporean national of Sri Lankan origin, has consistently maintained his innocence and had indicated he wanted to stay on after his term expired on June 30. 
 
But a group of Sri Lankan academics and professionals had gone to court to demand action against him and the government decided not to keep him on. 
 
The new bank chief also promised to work independently following allegations that the office of the governor had become politicised in recent years. 
 
&quot;When I met the president he just told me one thing - &#39;Do your work in a straight way and do not fear anybody in discharging your duties&#39;. My intention is to follow his direction,&quot; Coomaraswamy told his staff. 
 
He said he wanted to ensure strong macro economic fundamentals to win the confidence of people both in and outside the country. 
 
(AFP)

'I can assure you that I will do my utmost to do so at all times,' the chief said

The new head of Sri Lanka's central bank Indrajit Coomaraswamy pledged on Monday to uphold its credibility after allegations of insider dealing that forced his predecessor to leave. Sri Lanka's president bowed to pressure to replace Arjuna Mahendran after he was accused of leaking information to his son-in-law's firm, which allegedly made millions of dollars in profits from central bank bond auctions. The scandal came with Sri Lanka's economy under stress -- last month the country began receiving a $1.5 billion bailout from the International Monetary Fund. On Monday Coomaraswamy told staff the bank was "one of the great institutions in this country". "I am acutely aware that a primary responsibility, arguably the primary responsibility of the governor, is to uphold this reputation and credibility," said the 66-year-old former director of economic affairs at the Commonwealth Secretariat, an intergovernmental agency of Commonwealth countries in London. "I can assure you that I will do my utmost to do so at all times." Mahendran, a Singaporean national of Sri Lankan origin, has consistently maintained his innocence and had indicated he wanted to stay on after his term expired on June 30. But a group of Sri Lankan academics and professionals had gone to court to demand action against him and the government decided not to keep him on. The new bank chief also promised to work independently following allegations that the office of the governor had become politicised in recent years. "When I met the president he just told me one thing - 'Do your work in a straight way and do not fear anybody in discharging your duties'. My intention is to follow his direction," Coomaraswamy told his staff. He said he wanted to ensure strong macro economic fundamentals to win the confidence of people both in and outside the country. (AFP)

Sri Lanka's new central bank chief to 'uphold credibility'

Sri Lanka&#39;s president on Saturday bowed to pressure from activists and replaced the country&#39;s controversial central bank chief, appointing a respected economist to the top job. 
 
President Maithripala Sirisena announced that Indrajit Coomaraswamy, 66, had been appointed as the new governor of the central bank, effective immediately. 
 
Coomaraswamy was previously a director of economic affairs at the Commonwealth Secretariat, an inter-governmental agency of Commonwealth countries in London. 
 
&quot;After consulting all parties concerned, I appointed top economist Dr Indrajit Coomaraswamy to lead the Central Bank of Sri Lanka,&quot; the president posted on Twitter. 
 
The announcement ended any prospect of outgoing governor Arjuna Mahendran being reappointed after his tenure ended on Thursday. He had indicated he was prepared to complete another term. 
 
Sirisena had come under intense pressure not to reappoint Mahendran, who had faced allegations of insider trading. 
 
A group of Sri Lankan academics and professionals had gone to court to demand action against Mahendran, a Singapore national of Sri Lankan origin. 
 
Activists had threatened to take to the streets unless the president replaced him. 
 
He was accused last year of leaking inside information to his son-in-law&#39;s firm, allegedly allowing it to make millions of dollars in profits from a central bank bond auction. 
 
Mahendran has consistently maintained his innocence. 
 
Sri Lanka&#39;s economy is under stress and last month began receiving the first tranche of a $1.5 billion bailout from the International Monetary Fund. 
 
(AFP)&nbsp; 
 
 
&nbsp;

Activists had threatened to take to the streets unless the President replaced Arjuna Mahendran

Sri Lanka's president on Saturday bowed to pressure from activists and replaced the country's controversial central bank chief, appointing a respected economist to the top job. President Maithripala Sirisena announced that Indrajit Coomaraswamy, 66, had been appointed as the new governor of the central bank, effective immediately. Coomaraswamy was previously a director of economic affairs at the Commonwealth Secretariat, an inter-governmental agency of Commonwealth countries in London. "After consulting all parties concerned, I appointed top economist Dr Indrajit Coomaraswamy to lead the Central Bank of Sri Lanka," the president posted on Twitter. The announcement ended any prospect of outgoing governor Arjuna Mahendran being reappointed after his tenure ended on Thursday. He had indicated he was prepared to complete another term. Sirisena had come under intense pressure not to reappoint Mahendran, who had faced allegations of insider trading. A group of Sri Lankan academics and professionals had gone to court to demand action against Mahendran, a Singapore national of Sri Lankan origin. Activists had threatened to take to the streets unless the president replaced him. He was accused last year of leaking inside information to his son-in-law's firm, allegedly allowing it to make millions of dollars in profits from a central bank bond auction. Mahendran has consistently maintained his innocence. Sri Lanka's economy is under stress and last month began receiving the first tranche of a $1.5 billion bailout from the International Monetary Fund. (AFP)

Sri Lanka's controversial central bank chief goes