With due consideration to the prevailing and evolving domestic and international macroeconomic environment, the Monetary Board, at its meeting held on 22 June 2017, was of the view that the current monetary policy stance is appropriate and decided to maintain the policy interest rates of the Central Bank of Sri Lanka at their present levels.

The decision of the Monetary Board is consistent with the objective of maintaining inflation at mid-single digit levels over the medium term and thereby facilitating a sustainable growth trajectory. The rationale underpinning the monetary policy stance is set out below. 

The 20th Annual Meeting of the Asia/Pacific Group on Money Laundering will be held in Colombo during July 17-21, 2017 with the participation of about 450 local and foreign delegates from 41 member countries and several international observer organisations. This event will be graced by His Excellency the President Maithripala Sirisena as the Chief Guest.

The Manufacturing Sector PMI, following the seasonal pattern, recorded 41.8 in April which is a decrease of 24.7 index points compared to March 2017. This indicates that the manufacturing activities contracted in April 2017, which is largely attributable to the decrease in the Production and New Orders sub-indices, following the significant increases observed in PMI for the month of March 2017. As highlighted by the survey respondents the new year holidays in April have also contributed to this seasonal decline in manufacturing activities. Further, all the sub-indices of PMI declined compared to the previous month. Moreover, all the sub-indices of PMI apart from Suppliers’ Delivery Time sub-index dropped below the neutral 50.0 threshold in April 2017. However, the expectation for activities indicates an improvement for the next three months.

As expected, the Colombo Consumer Price Index (CCPI, 2013=100) based headline inflation, decelerated on a year-on-year basis to 6.9 per cent in April 2017 from 7.3 per cent in March 2017, and CCPI based core inflation also decelerated to 6.8 per cent in April 2017 from 7.3 per cent recorded in the previous month. It is expected that inflation based on the National Consumer Price Index (NCPI, 2013=100), which edged up in March 2017, will also display a similar decline in April 2017. Supported by monetary policy adjustments from end 2015, inflation is projected to decelerate gradually to the desired mid-single digit levels by end 2017, although there could be some monthly fluctuations due to short term supply side disruptions and the base effects of tax revisions in 2016.