Sri Lanka’s Inflation Path Safe, Says Central Bank Chief

COLOMBO (News 1st); Central Bank Governor Dr. Nandalal Weerasinghe has clarified that Sri Lanka’s monetary policy framework under the International Monetary Fund (IMF) does not include a rigid inflation target, but rather operates within a flexible band designed to maintain macroeconomic stability.

Speaking on the country's inflation management strategy, Dr. Weerasinghe emphasized that the IMF does not impose a fixed inflation target. 

Instead, it provides a consultative framework that allows for flexibility, with a ±3% band around the inflation goal. 

Sri Lanka’s own commitment, in coordination with the government, is to maintain inflation at 5%, with a ±1–2% margin.

“If we fail to meet our target, we report to Parliament,” he said, noting that the IMF’s approach is more lenient, with consultations triggered only if inflation breaches the upper or lower bounds. 

The upper band under the IMF framework is 8%, while the government’s threshold is 7%, making any breach on the upside a more critical concern.

Dr. Weerasinghe expressed confidence that Sri Lanka’s inflation path remains consistent with its commitments and that no breach of the upper band is expected. He also reiterated that the Central Bank’s policy direction is aligned with both domestic and international expectations for price stability.