Dr. P. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka, has outlined the institution’s strategic priorities for the upcoming year, focusing on restoring normalcy and stability through the implementation of effective macroeconomic policies, including monetary policy.
The Central Bank aims to stabilize inflation around the 5% target, in line with the Flexible Inflation Targeting (FIT) framework. Dr. Weerasinghe emphasized that the primary goal is to keep the economy on track for sustained growth over the medium term, ensuring the long-term prosperity of the nation.
He noted that the deflationary environment resulting from one-off supply-side price adjustments is expected to persist into early 2025, based on current projections.
However, inflation is expected to converge to the target in the latter half of the year as the impact of supply-side factors diminishes and accommodative conditions are supported by relaxed monetary policy. During this time, the Central Bank will continue to submit detailed reports to Parliament, as mandated by the Central Bank of Sri Lanka Act (CBA), explaining any deviations from the inflation target, even if it remains below the target. This is part of the Central Bank’s commitment to transparency and accountability.
Following the high inflationary period from late 2021 to early 2023, Dr. Weerasinghe believes that the temporary deflationary phase will offer some relief to the public by easing the cost of living.
