Sri Lanka’s central bank is set to review its agreement on the inflation target with the government in 2026, according to Governor Nandalal Weerasinghe. This review is conducted periodically under the new monetary law.

“As required by law, there will be a review of the agreement with the Government regarding the inflation target this year,” Weerasinghe stated. He also expressed gratitude to stakeholders who have already provided input on the target-setting process.

Previously, the central bank had requested a 5 percent floor target and a 7 percent ceiling from the last administration, which was granted. However, despite missing the target last year, the central bank managed to maintain monetary stability through overperformance.

There is growing advocacy for reducing the target and establishing a ceiling to prevent currency depreciation and avert a potential second default.

(Colombo/Jan08/2026)