Sri Lanka has the right balance of monetary policy at the moment, and domestic inflation is expected to turn positive around next month, Central Bank of Sri Lanka Governor P. Weerasinghe said on Wednesday.
Sri Lanka’s inflation, which was minus 0.6% year-on-year in June, is expected to reach the central bank’s target of 5% in the next four to six quarters, Weerasinghe said on a panel at the Reuters NEXT Asia summit in Singapore.
“I think we are in a right balance in the monetary policy. We have some space if we are to relax further, but I think right now we have a cautious approach,” he added.
Supported by a $2.9 billion programme from the International Monetary Fund, Sri Lanka has steadily recovered from a financial crisis caused by a severe shortfall of foreign exchange reserves three years ago.