COLOMBO, July 5 (Reuters): Sri Lanka's economy can achieve its growth target this year without risk of overheating, central bank governor Ajith Nivard Cabraal said on Friday, despite interest rates at multi-year lows.
The central bank has been maintaining low interest rates since January and yields in government treasuries have also dropped to multi-year lows.
The island nation's economy expanded 7.6 per cent in the first quarter of this year, slowing from 8.2 per cent in the previous quarter. The central bank has estimated growth of 7.8 per cent for 2014, higher than last year's 7.3 per cent.
"Such growth is satisfactory and could be achieved without any risk of overheating according to our current estimates. Hence, we do not see a need to become more aggressive," Cabraal told a Reuters market forum.
Moody's Investors Service, while keeping a stable outlook for Sri Lanka's banking system, said on Thursday that the economy remains one of Asia's fastest-growing economies.
Srikanth Vadlamani, a Moody's vice president and senior analyst, said in a statement it estimated loan growth of 14 per cent this year which it does not view as excessive.
Sri Lanka's economy achieved record growth of 8.2 per cent in 2011 due to higher credit growth and imports, backed by low interest rates and a firm rupee.
Sri Lanka central bank sees no overheating despite lower rates
FE Team | Published: July 06, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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