COLOMBO, Oct. 22 (Xinhua) -- The Central Bank of Sri Lanka (CBSL) is expected to continue an accommodative monetary policy amid a decline in market lending rates.

The bank said Thursday in its Monetary Policy Review for October that the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) would remain at the current level of 4.5 percent and 5.5 percent, respectively.

The CBSL adopted unprecedented monetary easing measures this year which have led to an overall decline in market lending rates which is expected to continue.

"Following the contractions recorded in the preceding three months, credit disbursed to the private sector expanded notably in August 2020, reflecting the impact of low lending rates as well as concessional credit schemes," it said.

The central bank said it is likely that Sri Lanka's gross domestic product growth rate has declined greatly in the second quarter, though unemployment has reduced from 5.7 percent to 5.4 percent.

"Other developments observed in leading indicators and high-frequency data since the relaxation of the countrywide lockdown measures suggest that Sri Lanka is on a path towards economic revival," it concluded.

Sri Lanka's external sector remains favorable due to high earnings from exports and workers remittances, low crude oil prices, and a narrowing of the trade deficit amid import restrictions.

Sri Lanka's gross official reserves were an estimated 6.7 billion U.S. dollars at the end of September, enough to cover 4.6 months of imports.

The bank said inflation is expected to remain within the 4 to 6 percent range in the short to medium term. Enditem

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