In terms of Section 26(5) of the Central Bank of Sri Lanka Act, No. 16 of 2023 (CBA), if the Central Bank fails to meet the inflation target set out in the Monetary Policy Framework Agreement (MPFA) by a margin specified in the same for two consecutive quarters, the Monetary Policy Board is required to submit a report to Parliament through the Minister of Finance, which shall also be made available to the public.
The MPFA signed between the Minister of Finance and the Central Bank, on October 3, 2023, stipulates the inflation target as 5 percent and specifies the margin for the purpose of Section 26(5) of the CBA as ±2 percentage points.
Since quarterly headline inflation, as measured by the Colombo Consumer Price Index (CCPI), deviated from the inflation target by more than the margin stipulated in the MPFA, from the lower side for two consecutive quarters in the second and third quarters of 2024, recording 1.4 percent and 0.8 percent respectively, the Report required under Section 26(5) of the CBA was submitted to Parliament through the Minister of Finance. The Report was presented to Parliament on January 10, 2025 by the Prime Minister and deliberated in detail at the meeting of the Committee on Public Finance (CoPF) on January 23, 2025.
The Report is now available for public access via the Central Bank website.
