Central Bank Governor Dr. Nandalal Weerasinghe stressed that there is no need to raise interest rates again this year.
He further said that the economy is recovering under the US$ 2.9 billion International Monetary Fund program and that the government's objective is to maintain monetary policy in a way that does not hinder economic growth by controlling inflation. The Central Bank Governor said this in a discussion with Reuters.
The Central Bank raised interest rates by 100 basis points in May to control inflationary pressures caused by the Iran war situation, but he noted that it was the first interest rate hike in more than three years.
He further said that this had to be done as a precautionary measure since inflation was expected to rise to 7%.
However, he added that since inflation has been in line with expectations so far, there is no need to further tighten or loosen monetary policy.
According to the Colombo Consumer Price Index, Sri Lanka's main inflation indicator, inflation rose to 7.3 percent in July, the highest growth rate recorded in three years.