Sri Lanka Eyes 5% Inflation by Mid-2026

COLOMBO (News 1st); The Central Bank of Sri Lanka (CBSL) remains firmly committed to its inflation target of 5%, as agreed with the government in 2023 under the provisions of the Central Bank Act, according to Governor Dr. Nandalal Weerasinghe.

Dr. Weerasinghe emphasized that the agreement ensures CBSL’s responsibility for achieving the target. However, he acknowledged that deflationary conditions and a prolonged period of low inflation caused headline inflation to fall below the target margin during the second quarter of 2024.

“The Central Bank continued to submit reports on the deviation of headline inflation from the inflation target to the parliament through the Minister of Finance. By making these reports available to the public, the Central Bank has further strengthened its transparency and accountability to both the parliament and the general public, thereby reinforcing credibility of and anchoring inflation expectations,” he said.

Looking ahead, CBSL projects inflation to gradually rise in 2026, reaching the 5% target by the second half of the year. 

However, the Governor cautioned that Cyclone Ditwah’s economic impact introduces both upside and downside risks to this outlook.

“The possible effects of the cyclone and corresponding policy responses will be incorporated into upcoming forecasts during our monetary policy cycles,” Dr. Weerasinghe added.