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Inflation,
money growth easing – CB
Central
Bank last week said that inflation and growth in money
supply was easing whilst exchange rate remain stable.
This and other assessments were made following the Monetary
Policy Review for December.
The declining trend in year-on-year inflation that commenced
from July 2008 continued into November. Inflation, as
measured by the year-on-year change in the Colombo Consumers’
Price Index (base=2002) was 16.3 per cent in November
2008, compared to 20.2 per cent in the previous month.
The significant decline in inflation is attributable
to the pass-through of the rapidly declining international
commodity prices, the stringent demand management policies
adopted by the Central Bank and improvements in domestic
supply conditions.
The
Central Bank’s continued demand management policies
have been instrumental in curbing the demand driven
inflationary pressures in the economy by containing
the expansion in monetary aggregates and ultimately,
domestic demand. Reserve money has been maintained well
within the stipulated targets for the first three quarters
of 2008 and it is envisaged that the target for the
final quarter would also be achieved. Growth in the
broad money supply has decelerated to single digit levels,
with growth declining to 9.8 per cent by end October
2008, compared to 16.6 per cent at end 2007.
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