Sri Lanka's new gov't keep policy rates unchanged ahead of interim budget

Sri Lanka's new government's Monetary Board has given a thumbs-up for economic prospects and maintained its policy rates amidst low inflation and a rebound in credit growth, the Central Bank said in a statement on Wednesday.

Sri Lanka's new government has been in power for just three weeks after presidential elections in the first week of January saw the election of a new president.

But the first monetary policy review statement of the new administration was optimistic, and comes a day after freshly appointed Finance Minister Ravi Karunanayake claimed the government has inherited a"scary" economic situation.

In the statement following the Monetary Board meeting, the first chaired by newly-appointed Central Bank Governor Arjuna Mahendran, no doom or gloom was predicted though Thursday's presentation of the mini-budget by the new government may shed greater clarity on the actual health of the economy as well as its prospects, analysts said.

The Monetary Board statement acknowledged low inflation, one of the longstanding achievements which the previous administration often trumpeted.

It also noted that the economy grew by 7.7 percent during the third quarter of 2014 supported by strong performance in the industry and the services sectors.

Analysts said it was too early to expect a proper assessment of the data or the real economy hence the status quo was maintained.

Following the review, the Monetary Board kept record low policy rates unchanged for the 12th consecutive month. "With appropriate macroeconomic policies to boost domestic and foreign investor confidence, the Sri Lankan economy is expected to record a robust performance in the period ahead,"the statement said.

Sri Lanka was expected to grow by 7.8 percent in 2014. Endi