• CCPI based Inflation increased in January 2020

    Headline inflation as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) increased to 5.7 per cent in January 2020 from 4.8 per cent in December 2019. This was driven by monthly increase of prices of items in both Food and Non-food categories. Food inflation (Y-o-Y) increased substantially to a 25-month high of 12.4 per cent in January 2020 from 6.3 per cent in December 2019, while Non-food inflation (Y-o-Y) stood at 2.9 per cent.

    The change in the CCPI measured on an annual average basis increased marginally to 4.5 per cent in January 2020 from 4.3 per cent in December 2019. 

    Monthly change of CCPI recorded at 1.7 per cent in January 2020 and it was due to the price increases observed in the items of both Food and Non-food categories.

  • The Central Bank of Sri Lanka Reduces its Policy Interest Rates

    The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 29 January 2020, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points to 6.50 per cent and 7.50 per cent, respectively. The Board arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy. This decision supports a continued reduction in market lending rates, thereby facilitating the envisaged recovery in economic activity given the favourable medium term outlook for inflation, which is well anchored within the 4-6 per cent range.

  • Inflation increased in December 2019

    Headline inflation as measured by the year-on-year (Y-o-Y) change in the National Consumer Price Index (NCPI, 2013=100) increased to 6.2 per cent in December 2019 from 4.1 per cent in November 2019. This was driven by monthly increase of prices of items in the Food category along with the statistical effect of the low base prevailed in December 2018. Food inflation (Y-o-Y) increased substantially to 8.6 per cent in December 2019 from 4.0 per cent in November 2019, while Non-food inflation (Y-o-Y) remained unchanged at 4.2 per cent. 

  • Forensic Audits

    The Central Bank of Sri Lanka (CBSL) notes several instances of misreporting in the media with respect to the forensic audits carried out and wishes to make the following clarifications:-

  • External Sector Performance - November 2019

    The trade deficit contracted marginally in November 2019 (year-on-year), with both imports and exports declining. During the first eleven months of 2019, the trade deficit contracted compared to the corresponding period in 2018, as a result of the significant decline in expenditure on imports along with a marginal increase in earnings from exports. Although tourist arrivals decreased on a year-on-year basis in November 2019, a continued recovery is seen in the tourism industry. Workers’ remittances declined (year-on-year) in November 2019 and have recorded a cumulative decline during the first eleven months of 2019. Meanwhile, the financial account of the balance of payments was augmented with the proceeds of the seventh tranche of the International Monetary Fund’s Extended Fund Facility (IMF EFF) programme and net foreign inflows to the Government securities market.

  • Sri Lanka Purchasing Managers’ Index - December 2019

    Manufacturing PMI expanded at a slower pace in December 2019 recording an index value of 54.3 mainly due to the slower expansion in New Orders, Production and Stock of Purchases.

    All the sub-indices indicated an expansion, yet at a slower pace, compared to November 2019. New Orders and Production expanded at a slower rate owing to the slowdown in manufacturing of textile and wearing apparel sector. A significant slowdown in employment was experienced, particularly in manufacturing of wearing apparel sector as potential employees were attracted to seasonal jobs for better remuneration. This slowdown in employment partly impacted the slowdown in production.

  • Road Map 2020 - Monetary and Financial Sector Policies for 2020 and Beyond

    Today, the Sri Lankan economy is at a crossroads. Decades of policy making as a sovereign nation have produced improvements in many aspects of the economy. There was significant social upliftment. Nevertheless, tough challenges remain – below potential growth, persistence of poverty pockets, underutilisation of productive resources, inadequate expansion and diversification of exports, shortfall of non-debt creating capital inflows, large credit and interest rate cycles, and high fiscal deficits and public debt levels. These challenges, which have been the outcomes of policy as well as non-policy factors, need to be addressed decisively for the economy to takeoff to a high and sustainable growth path.

  • Extension of the Suspension of Business of Perpetual Treasuries Limited

    The Monetary Board of the Central Bank of Sri Lanka, acting in terms of the Regulations made under the Registered Stock and Securities Ordinance and the Local Treasury Bills Ordinance, has decided to extend the suspension of Perpetual Treasuries Limited (PTL) from carrying on the business and activities of a Primary Dealer for a period of six months with effect from 4.30 p.m. on 05th January 2020, in order to continue the investigations being conducted by the Central Bank of Sri Lanka.

  • Meeting of Targets on Average Weighted Prime Lending Rate for end 2019 in line with the Monetary Law Act Order No. 2 of 2019

    The Monetary Law Act Order No. 02 of 2019 on “Enhancing Efficiency of the Transmission of Recent Policy Decisions to Rupee Denominated Market Lending Rates” required, inter alia, every licensed commercial bank (LCB) to reduce their weekly Average Weighted Prime Lending Rate (AWPR)  by at least 250 basis points by 27 December 2019, compared to their AWPR published by the Central Bank of Sri Lanka as at 26 April 2019 in the Weekly Economic Indicators publication. This shall not apply to LCBs, whose AWPR reaches or falls below 9.50 per cent per annum as at the date of this Order or anytime thereafter.  

  • Monetary Policy Review - No. 8 of 2019

    The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 26 December 2019, decided to maintain its accommodative monetary policy stance with the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank remaining at their current levels of 7.00 per cent and 8.00 per cent, respectively. The Board arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy. The decision of the Monetary Board is consistent with the aim of maintaining inflation in the 4-6 per cent range while supporting economic growth to reach its potential over the medium term.

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