Sri Lanka's central bank cut one of its main policy rates to its lowest level in more than two years and removed restrictions aimed at limiting commercial banks' credit access to spur economic growth. The central bank slashed the reverse repurchase rate by 0.25 percentage points to 11.50 percent, its lowest since December 2006, but kept the repurchase rate steady at 9.0 percent.
Sri Lanka's 2009 growth is expected to fall to an eight-year low of 2.5 percent due to the central bank's past tight monetary policy adopted to curb record inflation and the financial crisis. The central bank said it had decided to ease its tight monetary stance to support the slowing economy and as annual inflation is expected to remain at single digit level throughout this year and 2010.
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