Repo rate stands at 6.25 percent

In its first repo rate announcement for 2006, to indicate that the rate has been increased from six to 6.25 percent in light of persistent inflationary pressures, the Bank said it moved to tighten liquidity in December by withdrawing $1 billion from the financial system. All commercial banks were asked to deposit $1 billion into a special fund that was created by the Central Bank. The Bank has also stepped up sales of open market bills of longer term maturity (one or two years).

In its repo rate announcement, the Bank said: "These measures have sharply reduced excess liquidity and created a more favourable environment for the transmission of interest rate signals."