Considering developments and outlook in the domestic and international macroeconomic environment, the Monetary Board, at its meeting held on 25 September 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.

Given below are the key factors that the Monetary Board considered in arriving at the decision.

The Manufacturing Sector PMI recorded 54.4 in August which is a slight increase of 0.1 index points compared to July 2017. The increase was driven by the increase in the Stock of purchases sub-index due to slow progress in production activities during the month and maintaining buffer stocks to cater to the already received new orders to be supplied in the future. Suppliers’ Delivery Time lengthened mainly due to some company specific constraints. The Employment sub-index contracted due to the difficulties in finding unskilled employees in the market to address high labour turnover, especially in the apparel sector. However, all the sub-indices apart from the Employment sub-index of PMI recorded values above the neutral 50.0 threshold signalling an overall expansion in August. Moreover, the Expectation for activities remain positive for the next three months.