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Ravi K questions Govt over prolonged low inflation
Colombo, March 4 (Daily Mirror) - UNP MP Ravi Karunanayake raised serious concerns over Sri Lanka’s continued below-target inflation, questioning whether official economic indicators reflect the rising cost of living faced by the public.
Raising the matter in Parliament, Karunanayake said the Central Bank of Sri Lanka (CBSL) has submitted several deviation reports confirming that quarterly headline inflation has remained below the lower bound of the 5% target for five consecutive reporting cycles.
He pointed out that headline inflation averaged minus 1.1 percent in the second quarter of 2025 and 0.8 percent in the third quarter, remaining below 3 percent and thereby triggering the statutory reporting requirement under the Central Bank Act.
Despite what he described as substantial monetary easing of nearly 800 basis points since June 2023, the MP questioned why inflation has failed to return to the target range.
He also asked how the Government reconciles sub-3 percent inflation with what he termed the “persistently high cost of living” experienced by the public.
Karunanayake further queried whether prolonged below-target inflation reflects weaker-than-expected aggregate demand, notwithstanding reported GDP growth of 5 percent during the first nine months of 2025.
He also sought clarification on whether medium-term inflation projections have been revised, noting that earlier forecasts anticipated a faster return to the 5 percent target, while current projections indicate inflation may remain below 3 percent until at least the third quarter of 2026.
Referring to fiscal consolidation under the IMF Extended Fund Facility, he asked to what extent such measures have contributed to demand compression and sustained low inflation.
Furthermore, he questioned whether the current policy rate of 7.75 percent is appropriate in real terms, particularly amid subdued core inflation and negative energy and transport components, and whether the 5 percent inflation target is under review.
In addition, the MP raised concerns regarding governance under the CBSL Act, No. 16 of 2023, seeking clarity on the statutory distinction between the Governing Board and the Monetary Policy Board, where accountability to Parliament lies, and who currently serves on each body.
He also asked how the new structure differs from the former Monetary Board under the Monetary Law Act, including the rationale for removing the Secretary to the Treasury from Central Bank decision-making.
Karunanayake further questioned whether the 2023 Act contains a policy gap, pointing to the absence of explicit statutory macroeconomic targets relating to growth, employment, financial stability, foreign reserve adequacy or balance of payments sustainability beyond medium-term inflation targeting.
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