Central Bank keeps policy rate unchanged

The Central Bank of Sri Lanka (CBSL) has decided to maintain the Overnight Policy Rate (OPR) at 7.75%, following its latest Monetary Policy Board meeting held yesterday (27).

The Monetary Policy Board arrived at the decision after carefully considering evolving developments and the outlook on the domestic front and global uncertainties, the CBSL noted.

The Board is of the view that the current monetary policy stance will support steering inflation towards the target of 5%. Inflation measured by the Colombo Consumer Price Index (CCPI) remained unchanged at 2.1% in December 2025. However, food prices edged higher in December compared to November. This was due to supply chain disruptions caused by Cyclone Ditwah and higher demand for food during the festive season. 

Inflation is projected to accelerate gradually and move towards the target of 5% by the second half of 2026, the CBSL added.

Core inflation, which excludes price changes in volatile food, energy and transport from the CCPI basket, has also shown some acceleration in recent months. The Central Bank said going forward, core inflation is expected to accelerate further as demand in the economy strengthens.

Meanwhile, the economy grew by 5.0% during the first nine months of 2025. Despite the slowdown in economic activity following Cyclone Ditwah in late 2025, early indicators reflect greater resilience, according to the CBSL. Furthermore, credit disbursed to the private sector by commercial banks and other financial institutions continued its notable expansion in late 2025.

Meanwhile, the Monetary Policy Board has stated that it remains prepared to implement appropriate policy measures to ensure that inflation stabilises around the target, while supporting the economy to reach its potential, according to the Central Bank.