The Central Bank of Sri Lanka which unexpectedly reduced it policy interest rates which decide the interest rates of commercial banks in April, has decided not to revise it this month (May).

Though currently inflation remains low, the increased borrowings by the state and private sectors has increased pressure on the exchange rates.

The Central Bank has further stated that the under the current circumstance inflation is expected to remain at low levels in the following months.

Last March, the private sector has borrowed Rs. 41,4 billion from Sri Lankan banks and private borrowings would remain high in the future as well, states the Central Bank.

Accordingly, The Central Bank has decided to maintain the policy interest rates unchanged at 06 per cent to 7.5 per cent in May as well.

However, analysts point out that in the face of the growing budget deficit and private sector borrowings it would be difficult to maintain the low interest scenario and this would exert pressure on the exchange rates.

This year, the Sri Lankan Rupee has depreciated by around 2.0 per cent against the US dollar.