Sri Lanka’s Interest rates unchanged after Central Bank meeting

The Central Bank’s Monetary Policy Board has decided to maintain the Overnight Policy Rate (OPR) at the current level of 7.75 per cent at its meeting held on Tuesday.  This is a signal to market interest rates to remain unchanged.

An official statement said the Board arrived at this decision after carefully considering both domestic and global developments. The Board was of the view that the current monetary policy stance will support steering inflation towards the target of 5 per cent.

Headline inflation based on the Colombo Consumer Price Index (CCPI) turned positive in August 2025, ending11 months of deflation. Inflation is projected to gradually increase towards the target of 5 per cent by mid-2026.

Reflecting strengthening domestic demand, core inflation is also expected to pick-up, and stabilise thereafter around the headline inflation target.

Medium term inflation expectations remain anchored around the inflation target. The economy is estimated to have grown by 4.8 per cent in H1-2025. Leading indicators reflect a continuation of this momentum into Q3-2025. Credit to the private sector recorded a notable and broad-based expansion thus far in 2025. This expansion has been supported by the low-interest-rate environment and the recovery in economic activity. The continued expansion in private sector credit is expected to further support domestic economic activity in the period ahead.

The external sector remained resilient, supported by improved inflows from tourism and workers’ remittances, despite a widening trade deficit. Continued net foreign exchange purchases by the Central Bank have helped maintain gross official reserves at US$s 6.2 billion by end August, amidst debt service payments.

The Sri Lanka rupee remains broadly stable. All three major rating agencies have now raised Sri Lanka’s sovereign ratings, confirming the improved credit standing.  Meanwhile, global financial conditions have eased, although geopolitical uncertainties remain.

The Board will continue to monitor and assess incoming data on developments on the domestic and global fronts and emerging risks. The Board remains prepared to implement appropriate policy measures to ensure that inflation stabilises around the target, while supporting the economy to reach its potential. 

- ENDS -