ECONOMYNEXT – The Central Bank of Sri Lanka kept its overnight policy rate (OPR) unchanged at 7.75 percent at its meeting on Tuesday, the bank said in a statement.
The OPR has been stable since May last year.
Here is the central bank’s full first monetary policy statement for the year:
Monetary Policy Review: No. 01 – January 2026
Central Bank of Sri Lanka keeps the Overnight Policy Rate (OPR) unchanged The Monetary Policy Board decided to keep the Overnight Policy Rate (OPR) unchanged at its current level of 7.75% at its meeting yesterday.
The Board reached this decision after careful consideration
evolving developments and outlook on the domestic front and global uncertainties. The Bank Council is of the opinion that the current setting of monetary policy will support the direction of inflation towards the 5% target.
Inflation as measured by the Colombian Consumer Price Index (CCPI) remained unchanged at 2.1% in December 2025. However, food prices rose slightly in December compared to November. This was it
due to supply chain disruptions caused by Cyclone Ditwah and higher demand for food during the festive season.
Inflation is expected to gradually pick up and move towards the 5% target by the second half of 2026. Core inflation, which excludes changes in volatile food, energy and transport prices
from the CCPI basket, has also shown some acceleration in recent months.
Going forward, core inflation is expected to accelerate further as demand in the economy strengthens. Meanwhile, inflation
expectations appear to be well anchored around the inflation target.
The economy grew by 5.0% in the first nine months of 2025. Despite a slowdown in economic activity following Cyclone Ditwah at the end of 2025, early indicators reflect greater resilience.
Credit extended to the private sector by commercial banks and other financial institutions continued to expand significantly at the end of 2025.
This reflects increased demand for credit as the economy improves
activity and increased vehicle imports. Post-cyclone rebuilding is expected to maintain this momentum.
The foreign current account is estimated to show a significant surplus in 2025, despite a widening trade deficit. Foreign remittances remained healthy during 2025. Despite the heavy debt
service payments during the year, gross official reserves have been increased to $6.8 billion by the end of 2025.
This was mainly supported by net foreign exchange purchases by the central bank and inflows from multilateral agencies. The Sri Lankan rupee has weakened by 5.6% against the US dollar for the year.
2025 and remained essentially stable during this year. This includes a swap facility from the People’s Bank of China.
The Governing Council remains ready to put in place appropriate policy measures to ensure inflation stabilizes around the target while supporting the economy to reach its potential.
The next regular monetary policy review statement will be released on March 25, 2026. (Colombo/January 28, 2026)
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