CBSL maintains Overnight Policy Rate at current level

The Monetary Policy Board of the Central Bank of Sri Lanka (CBSL) has decided to maintain the Overnight Policy Rate (OPR) of the Central Bank at its current level of 8.00 per cent. 

The Board has arrived at this decision, at its meeting held on this Tuesday (28), following a careful analysis of the current and expected macroeconomic developments on the domestic and global fronts.

This decision was made with a medium-term view of ensuring that inflation converges to the target of 5 per cent, while supporting the economy to reach its potential, a statement said.

The Board observed that the current period of deflation, as projected earlier, has largely been an outcome of administratively determined energy price reductions. 

This trend is expected to continue over the next few months before inflation begins adjusting towards the targeted level in the second half of 2025, it said. 

Meanwhile, Headline inflation is projected to remain negative in the near term, before converging to the target.  

Headline inflation, as measured by the year-on-year change in the Colombo Consumer Price Index (CCPI), remained in the negative territory for the fourth consecutive month in December 2024. 

This was mainly driven by the previous downward revisions to electricity tariffs and domestic fuel prices, amidst subdued demand pressures, the CBSL noted.