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S. Lanka says to intervene if food supply hits inflation

[Reuters, Tuesday, 8 February 2011 10:18 No Comment]

Sri Lanka sees the risk of supply-side inflation as low, but will intervene with a support mechanism such as a tariff reduction on food imports to offset it if it happens, the central bank governor said on Tuesday.

"We are closely watching any spikes in inflation due to supply shocks," Central Bank Governor Ajith Nivard Cabraal told Reuters, referring to damage to the country’s staple rice crop caused by two rounds of heavy flooding.

"Our assessment is there wouldn’t be such a spike. If there is a spike, it will be supply and we will support it with intervention like a tariff reduction," he said.

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