CBSL: Fiscal Safety Nets, Not Monetary Policy, Must Shield Against Inflation Impact 📈

• Key Directive: The Central Bank of Sri Lanka (CBSL) reaffirmed that fiscal policy and social safety nets—rather than monetary policy—are the correct mechanisms to protect vulnerable social segments from inflation. • Blunt Instrument: CBSL Assistant Governor Dr. P.K.G. Harischandra highlighted that monetary policy cannot differentiate impacts across income groups, making distributional policy outside its effective reach. • Inflation Target: CBSL defended its 5% inflation target, stating that household and business inflation expectations are expected to align with this benchmark based on historical pre-crisis credibility.