Central Bank urges social safety nets over monetary policy for inflation relief

Officials at the Central Bank of Sri Lanka have stressed that monetary policy alone cannot shield citizens adversely affected by inflation, calling instead for comprehensive social safety nets to address the needs of vulnerable groups.

The position reflects growing recognition among policymakers that while interest rate decisions influence broader economic conditions, they do not directly alleviate hardship for lower-income households struggling with elevated living costs. The central bank has emphasized that social protection programmes, targeted subsidies, and welfare initiatives are better suited to providing relief where it is most needed.

The statement comes as Sri Lanka continues to grapple with inflationary pressures that have strained household budgets across the country. Food, energy, and transport costs have remained elevated, affecting purchasing power particularly among lower and middle-income earners.

Central bank officials have indicated that while monetary policy will remain focused on broader price stability and economic management, complementary fiscal and social measures from the government are essential to cushion the impact on those most vulnerable to inflation. This coordinated approach underscores the need for multi-faceted policy responses beyond the traditional tools of central banking.