CBSL To Normalise Rates In 2011

We expect the Central Bank of Sri Lanka to maintain its accommodative policy in 2010 as private sector credit growth has yet to post a convincing recovery. However, with inflation likely to remain above the bank's 5.0-6.0% target for much of the year, we maintain our forecast of a 50bps policy rate increase in late 2010, followed by more sustained hiking in 2011.

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