First Capital Research predicted a 50% chance for a policy rate cut by the Central Bank (CB) at its upcoming Monetary Policy Review Meeting this month.
"We believe that CB will maintain same policy stance in this monetary policy review, but given the concerns around economic growth, CBSL is likely to retain the monetary policy stance at “accommodative”, Colombo-based leading Research House, First Capital stated in its Pre-Policy Analysis Report.
Arguments against further relaxation in monetary policy
Improvement in high-frequency indicators with surplus liquidity in the system
As a response to the measures taken by the Govt, private sector credit has improved to LKR 87.4Bn in Sep while the market liquidity has reached LKR 140.0Bn by 13th Nov indicating that there is surplus l...