more gradual approach to policy rate setting ahead. chart 5 a somewhat faster rate rise our projections are based on a rise in the policy rate to around 3 percent in the course of winter. with this path for the policy rate, the interest rate on housing loans may move up to between 4 and 4½ percent. the reason the rate path is little changed since june, despite far higher - than - projected inflation, is that we are now seeing clear signs of a slowdown in the economy. easing economic pressures will contribute to curbing inflation further out. the aim of high and stable employment is also given weight in interest rate setting, and weaker economic developments imply that we will not raise the policy rate to the same extent as that implied, in isolation, by the aim of reducing inflation. chart 6 inflation will moderate and unemployment will likely edge up unemployment will likely edge up ahead. we could have chosen to raise the policy rate more gradually. but then we would have run the risk of having to tighten monetary policy more sharply later to tackle the high level of inflation, which would have increased the risk of a severe economic downturn. the future rate path will depend on how the economy evolves, and the projections are more uncertain than normal. if there are prospects that inflation will remain higher for longer than we now project, there may be a need for a higher policy rate. on the other hand, a faster decline in inflation and activity than currently projected may reduce the need for rate increases. the committee has also taken its decision on the countercyclical capital buffer. the countercyclical capital buffer rate was raised to 2. 5 percent, effective from 31 march 2023. the committee decided unanimously to maintain this requirement. the countercyclical capital buffer requirement increases bank solvency, making banks more resilient to shocks.

the world economy in particular. let me now say a few words about our own efforts in this sphere of activity. the initial phase of establishing a comprehensive framework for anti money laundering and combating financial terrorism in sri lanka was focused on the preparation of the draft legislation. with the passage of legislation, our efforts were then directed towards setting up of the infrastructure for the financial intelligence unit ( fiu ). we now have a fully operational fiu established in the central bank, the apex institution in the financial system in sri lanka, to meet both its local and international obligations. as you may be aware, sri lanka is presently engaged in a valiant effort to control many terrorist activities waged by the ltte, a group acknowledged worldwide as a terrorist movement. usa, canada, the eu and many other countries have banned this movement due to flagrant human rights violations and inhuman acts of terror. they have been designated as a terrorist group by most countries in the western hemisphere. as has been recognized worldwide, the most effective manner to undermine and defeat terrorist activities is to stop or curb its funding sources. notwithstanding the bans, the ltte has extended its tentacles in north america, the european union and australia. in response, those countries and nations are today taking meaningful steps to stop these fund raising activities and taking the perpetrators of such crimes to justice and we deeply appreciate such moves. the government of sri lanka is dedicated to winning the support of all countries in this regard through the exchange of information on a bi - lateral basis which would enhance bi - lateral co - operation through a structured exchange of information. only last week, one such initiative with switzerland was commenced where fruitful discussions were held to establish a framework and modalities for structured co - operation. it has also been recognized that efforts to combat the financing of terrorism require jurisdictions to expand the scope of the anti money laundering framework to include non profit organizations and, in particular, some dubious charities. this is to ensure that such organizations are not used, directly or indirectly, to finance and support terrorism. we are in possession of information of how certain so - called charities have been able to even hoodwink international agencies to donate funds to them for, seemingly, charitable or humanitarian causes, but which have, instead, been channeled for the upkeep of terrorist cadres and the provision of supplies to assist the terrorist effort. natural disasters such as the tsunami have also unwittingly lent a humanitarian face and ample cover to such activities. we,