Considering recent macroeconomic developments, the Monetary Board, at its meeting held on 27 December 2017, was of the view that the current monetary policy stance is appropriate and decided to maintain the policy interest rates of the Central Bank of Sri Lanka at their present levels. However, the Central Bank will continue to cautiously monitor the developments in the economy and take necessary policy actions, if warranted.

The key sectoral developments considered in arriving at the decision by the Monetary Board are discussed below.

Inflation, as measured by the change in the National Consumer Price Index (NCPI) (2013=100), which is compiled by the Department of Census and Statistics (DCS), decreased to 8.4 per cent in November 2017 from 8.8 per cent in October 2017, on year-on-year basis.

The change in the NCPI measured on an annual average basis increased from 7.1 per cent in October 2017 to 7.5 per cent in November 2017.

When the monthly change is considered, the NCPI increased from 124.8 index points in October 2017 to 126.4 index points in November 2017. This monthly increase was mainly due to the increase in prices of the items in the Food category which was led by adverse supply side developments. Price increase of coconuts, green chillies and vegetables were prominent. Nevertheless, prices of fresh fish and some fruits declined. Meanwhile, prominent price increases were observable in payments to medical laboratories and Payments to private hospitals room charges.