📈 Ravi Urges Review of CBSL Framework, Calls for 2-3% Inflation Target

Opposition MP Ravi Karunanayake has urged the government to prepare for the October 2026 statutory review of the Monetary Policy Framework Agreement to strengthen currency stability and protect savings. • Proposed Inflation Target: Urged a reduction in the medium-term headline inflation target to 2-3%, down from the current 5% set under the CBSL Act No. 16 of 2023. • Macroeconomic Concerns: Warned of a potential stagflationary environment where economic growth remains weak, private sector investment is subdued, and household purchasing power faces pressure despite the lack of strong aggregate demand. • Policy Shift Needed: Argued that Sri Lanka's inflation over the past decade has been driven by supply-side and imported factors rather than demand, meaning excessive reliance on interest rate adjustments alone is inadequate. • External Sector Focus: Emphasized that historical crises were rooted in balance-of-payments issues rather than conventional inflation. He recommended expanding CBSL's focus to include foreign exchange reserves accumulation, domestic savings, capital formation, and export competitiveness. • Regional Benchmarks: Cited lower targets in regional economies, such as India (4%), Indonesia (2.5%), Thailand (1-3%), and Malaysia (2-3%), alongside advanced economies targeting 2% to support currency confidence.