Sri Lanka expects to reign in its galloping inflation in the next few months, but savers will still get a raw deal as the Central Bank fights shy to tighten monetary policy

Sri Lanka expects to reign in its galloping inflation in the next few months, but savers will still get a raw deal as the Central Bank fights shy to tighten monetary policy.



Sri Lanka expects to reign in its galloping inflation in the next few months, but savers will still get a raw deal as the Central Bank fights shy to tighten monetary policy. "Although inflation continued to rise in January 2005, inflationary pressures are expected to moderate somewhat in the next few months due to favorable supply-side factors," the Central Bank said Wed in its monthly monetary policy statement, where it defended its decision to hold benchmark interest rates for the third consecutive month.

The repurchase rates, which is used to drain money from the banking system, remains at 7.

5 percent, and the reverse-repurchase rate at 9.0 percent, the statement said. The bank last raised rates by 50 basis points in November 2004.

Inflation, as measured by the Colombo Consumer Price Index, rose on a moving month average rate of 14.

6 percent in January, the fastest pace in 19 months, as supply side factors such as a drought hit food prices.

Sri Lanka's outgoing IMF Chief Jeremy Carter war