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The Central Bank of Sri Lanka publishes its inaugural Market Operations Report

The Central Bank of Sri Lanka (the Central Bank) released its inaugural Market Operations Report (MOR) with the aim of enhancing awareness and knowledge among the stakeholders on monetary operations carried out by the Central Bank in line with the prevailing monetary policy stance. The MOR would be a catalyst to improve transparency and accountability of the Central Bank under the Flexible Inflation Target (FIT) framework by effectively communicating the monetary policy implementation process.

External Sector Performance June 2024

External sector performance in the first half of 2024 remained positive, with higher inflows in the form of workers’ remittances and earnings from tourism, despite a slightly higher trade deficit.

Merchandise trade deficit ( Y-o-Y ) widened in June 2024, although it narrowed compared to May 2024.

CCPI based headline inflation accelerated, yet remained below the target, in July 2024

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100)1 was recorded at 2.4% in July 2024. Inflation continued to remain below the targeted level of 5% even after this acceleration.

SL Purchasing Managers’ Index (PMI) for Construction Industry – June 2024

Sri Lanka Purchasing Managers’ Index for Construction (PMI – Construction) reached 59.5 in June 2024, recording its highest index value in thirty consecutive survey rounds. Most of the respondents highlighted that the industry is mainly driven by projects funded by multilateral agencies, particularly related to road rehabilitation and water distribution.

The Central Bank of Sri Lanka Further Reduces Policy Interest Rates

The Monetary Policy Board of the Central Bank of Sri Lanka, at its meeting held on 23 July 2024, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 25 basis points (bps) to 8.25 per cent and 9.25 per cent, respectively.

Purchasing Managers’ Indices indicate expansions in both Manufacturing and Services activities in June 2024

Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 56.6 in June 2024, indicating an expansion in manufacturing activities. All the sub-indices, except for employment, remained above the neutral threshold during the month.

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