Sri Lanka sets its inflation target at 5 per cent with a two-point tolerance band for three years

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Sri Lanka sets its inflation target at 5 per cent with a two-point tolerance band for three years

1 October 2026

A new Monetary Policy Framework Agreement was signed on 1 October 2026 setting Sri Lanka's inflation target at 5% for the next three years.
The target carries a tolerance margin of plus or minus 2 percentage points.
It was signed by Hon. Anura Kumara Dissanayake, Minister of Finance, Planning and Economic Development and President of Sri Lanka, and Dr P Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka.
The agreement was entered into under Section 26 of the Central Bank of Sri Lanka Act, No. 16 of 2023.
It was published in Government Gazette Extraordinary No. 2508/28 dated 1 October 2026.
Quarterly headline inflation is the simple average of the year-on-year percentage changes in the monthly Colombo Consumer Price Index for the three months of each calendar quarter.

Inflation target: 5% Tolerance margin: plus or minus 2 percentage points Period covered: Three years Legal provision: Section 26 of the Central Bank of Sri Lanka Act, No. 16 of 2023 Gazette: Government Gazette Extraordinary No. 2508/28

Why it matters for exams: Inflation targeting agreements between a finance ministry and a central bank are a standard comparison question alongside India's own 4 per cent target.

Kerala PSCUPSC

1 October 2026 Source: Central Bank of Sri Lanka

In plain words

Monetary Policy Framework Agreement Agreement setting a central bank's inflation target — It fixes the numerical target a central bank must steer inflation towards.

CBA Central Bank of Sri Lanka Act, No. 16 of 2023 — The law that replaced the Monetary Law Act and gave the Central Bank its present mandate.