Hiking Still Expected To Begin In Q410

We maintain our forecast that the Central Bank of Sri Lanka (CBSL) will begin its tightening cycle in Q410 as credit conditions turn increasingly inflationary. We are forecasting the CBSL to raise the main repo and reverse repo rates by 50bps each by the end of the year, to 8.00% and 10.25% respectively, with 150bps of further hikes to the repo rate expected in 2011.

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