CB interest rates unchanged

The agriculture sector continued to expand in 2006 mainly due to better performance of paddy, rubber and coconut production, and recovery in the fisheries sector. The industry sector grew further during the first eight months of 2006 following the improvements in both export-oriented industries and domestic market oriented industries.

The Central Bank said last week it was keeping the current interest rates -- Repurchase and Reverse Repurchase -- at 9.625 per cent and 11.125 per cent, respectively.

It said continuing the high growth momentum witnessed since 2005, the economy grew by 7.6 per cent during the second quarter of 2006. Accordingly, the economy achieved a commendable growth of 8 per cent in the first half of 2006 benefiting from the strong performance in all major sectors and growing external demand arising from global economic growth.

The agriculture sector continued to expand in 2006 mainly due to better performance of paddy, rubber and coconut production, and recovery in the fisheries sector.

The industry sector grew further during the first eight months of 2006 following the improvements in both export-oriented industries and domestic market oriented industries.

The continued expansion in construction activity bolstered the expansion of the industrial sector output. Within the services sector, the dynamism seen in the main sub sectors of trade, telecommunication, transportation and financial services continued to support the high growth momentum.

The overall balance of payments registered a surplus of US$ 204 million and the gross official reserves stood at US$ 2,559 million (3.1 months of imports) by end August 2006.

Inflation (Colombo Consumers’ Price Index -CCPI) which was 15.3 per cent in August 2006 increased to 15.4 per cent in September 2006.

The 12-month moving average inflation increased from 10.8 per cent in August to 11.2 per cent in September 2006. This increase, however, is partly a reflection of the adjustment in administered prices such as fuel prices, electricity tariffs and bus fares.