More policy tightening on the way in Sri Lanka

The Central Bank of Sri Lanka (CBSL) left its two key interest rates unchanged today, as was widely anticipated, but tightened policy by increasing its reserve requirement ratio. Unlike other central banks in the region, the CBSL is yet to start a tightening cycle following the global crisis. However, we continue to expect both the repo rate and reverse repo rate to be raised in the second half of 2011.

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