Clarification by Central Bank on misleading news reports

The  Central  Bank  of  Sri  Lanka  (CBSL) has observed  media  reports  highlighting adjustments to the Value-Added Tax (VAT) as the reason for increased inflation in 2017.

The CBSL wishes to clarify the Governor’s response to a query from the media on rising inflation in 2017 at the press conference held on the Monetary Policy Review No. 6 of 2017 at CBSL Head Office.

In his response, the Governor stated that in addition to the adjustments made to the government tax structure, the adverse impact of weather related supply side disruptions, rising international commodity  prices  and  the  impact  of  the  base  contributed  to  the  acceleration  of inflation thus far during 2017. While the aforementioned factors lie beyond the control of the CBSL, it has maintained a tight monetary policy stance since early 2016 thereby containing demand-driven inflationary pressures and the buildup of adverse inflation expectations.