Sri Lankan Central Bank announced here Thursday that key policy interest rates have been raised with immediate effect.

The bank said that it had raised its repurchase rate by 25 basis points to 8.75 percent while the reverse repurchase rate has been raised by the same number of basis points to 10.25 percent.

"A deceleration in monetary expansion and a further containment of inflation and inflation expectations are expected with these measures," the bank statement said.

The interest rates were previously raised in Sept. which level was maintained during Oct. and Nov. monthly revisions.

The move aimed at curbing money supply and inflation, the analysts said it was delayed due to the presidential election which took place mid last month.

The bank expressed hope that lending institutions would raise their deposit interest rates in order to strengthen the effectiveness of the decision to hike policy interest rates.

The bank added that this year's projected 5.3 percent economic growth will continue given the improved performance in all the key sectors.

"Inflation has moderated since Feb. due to improved supply conditions and the policy measures taken," the bank said, adding that the year on year inflation had decreased to 9.18 percent in Nov., down from 10.4 percent in Oct.

The total foreign reserves of the country had increased to 4.1 billion US dollars at the end of October up from 3.4 billion dollars at the end of December 2004.

Source: Xinhua