The Central Bank of Sri Lanka has decided to keep its Overnight Policy Rate (OPR) unchanged at 7.75%, saying the current stance is appropriate to guide inflation toward its 5% target.
The Monetary Policy Board, which met yesterday, said its decision reflects an assessment of both domestic and global economic conditions. Headline inflation, measured by the Colombo Consumer Price Index, continued to rise for the third month in October, and is now expected to ease more gradually than previously projected—reaching the 5% target by the second half of 2026. Core inflation is also set to pick up slightly as economic activity strengthens, although medium-term inflation expectations remain steady.
Economic indicators point to continued recovery, supported by strong credit growth. Private-sector lending has expanded broadly in 2025, helped by the low interest rate environment and renewed demand, including for vehicle imports. The Central Bank expects this momentum to continue.
However, imports have increased in recent months, widening the trade deficit. The Bank noted that rising tourism earnings and workers’ remittances have helped soften the impact on the external sector. Gross official reserves remain above USD 6 billion this year, boosted by the Central Bank’s foreign exchange purchases, with further inflows expected in December from multilateral agencies. The recent pressure on the rupee has also eased as foreign exchange liquidity improved.
The Central Bank said it will continue to monitor economic developments and stands ready to take policy action if needed to keep inflation on its targeted path while supporting economic growth.
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