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

The future of Sri Lanka Central Bank&#39;s governor, Arjuna Mahendran, is at risk. &nbsp; 
&nbsp; 
His mandate expires by the end of June and his reappointment has become increasingly unlikely. &nbsp; 
&nbsp; 
Mahendran was appointed in January 2015, shortly after the elections that put an end to the 10-year rule of former President Mahinda Rajapaksa. &nbsp; 
&nbsp; 
His appointment was strongly backed by the Prime Minister of the island nation, Ranil Wickremasinge.&nbsp; 
&nbsp; 
Shortly after taking office, Mahendran was allegedly involved in a state-bond scam. A company owned by his son-in-law bought 30-year bonds at an interest rate higher than the market offered. The governor is accused of providing inside information. Investigations are still ongoing.&nbsp; 
&nbsp; 
At the time of the scam, newly-elected President Maithripala Sirisena had suggested Mahendran resign for the trial&#39;s duration. Prime Minister Ranil Wickremasinge, who strongly backed the governor&#39;s appointment, publicly disagreed with the President&#39;s statement.&nbsp; 
&nbsp; 
As the end of Mahendran&#39;s&nbsp;mandate nears, cabinet-level opposition is increasingly loud.&nbsp; 
&nbsp; 
The Minister of Social Empowerment and Welfare, SB Dissanayake, during a recent parliament session, said that the country&#39;s top political leaders should not reappoint the governor. &ldquo;The best thing the President and the Prime Minister can do is to let him go home without giving him an extension. We are not satisfied with his work.&rdquo;&nbsp; 
&nbsp; 
He is not the only political heavyweight to oppose the reappointment. The Minister of Fisheries Aquatic Resources, Mahinda Amaraweera, stated that action should be taken against the governor.&nbsp; 
&nbsp; 
All eyes are now on the Sri Lanka Prime Minister, as&nbsp;Mahendran can&#39;t possibly retain power without his support. Whether he has it or not remains to be seen. 
(WION)&nbsp;

The President and two ministers publicly oppose Mahendran's reappointment after his alleged participation in state-bond scam

The future of Sri Lanka Central Bank's governor, Arjuna Mahendran, is at risk. His mandate expires by the end of June and his reappointment has become increasingly unlikely. Mahendran was appointed in January 2015, shortly after the elections that put an end to the 10-year rule of former President Mahinda Rajapaksa. His appointment was strongly backed by the Prime Minister of the island nation, Ranil Wickremasinge. Shortly after taking office, Mahendran was allegedly involved in a state-bond scam. A company owned by his son-in-law bought 30-year bonds at an interest rate higher than the market offered. The governor is accused of providing inside information. Investigations are still ongoing. At the time of the scam, newly-elected President Maithripala Sirisena had suggested Mahendran resign for the trial's duration. Prime Minister Ranil Wickremasinge, who strongly backed the governor's appointment, publicly disagreed with the President's statement. As the end of Mahendran's mandate nears, cabinet-level opposition is increasingly loud. The Minister of Social Empowerment and Welfare, SB Dissanayake, during a recent parliament session, said that the country's top political leaders should not reappoint the governor. “The best thing the President and the Prime Minister can do is to let him go home without giving him an extension. We are not satisfied with his work.” He is not the only political heavyweight to oppose the reappointment. The Minister of Fisheries Aquatic Resources, Mahinda Amaraweera, stated that action should be taken against the governor. All eyes are now on the Sri Lanka Prime Minister, as Mahendran can't possibly retain power without his support. Whether he has it or not remains to be seen. (WION)

Sri Lanka Central Bank governor faces high-profile opposition

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

Sri Lanka Central Bank governor faces high-profile opposition