Sri Lanka should hold policy rates till inflation falls: IMF

Feb 13, 2013 (LBO) - Sri Lanka should freeze policy rates until inflation starts to fall, International Monetary Fund said as the country is going through the highest inflation generated by the central bank in nearly four years.

Inflation Risk Sri Lanka should hold policy rates till inflation falls: IMF Feb 13, 2013 (LBO) - Sri Lanka should freeze policy rates until inflation starts to the fall International Monetary Fund said as country is suffering from the highest inflation generated by the central bank in over four years. "Our view is that inflation levels of around 10 percent where we see them now is cause for holding interest rates cuts," IMF mission chief John Nelmes said.

"And the decision yesterday to keep monetary policy on hold, we support.

"And we think monetary policy should remain on hold for coming months till we see that inflation does start to turn the corner.

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The central bank is expecting inflation to ease from March. Sri Lanka rupee peg broke from February 2012 onwards.

At 9.8 percent inflation in the past 12 months, Sri Lanka is seeing one of the highest price rises in Asia.

According to IMF data even Afghanistan has generated only 6 percent inflation last year.

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