Colombo, Sept. 24 (Agencies) — The Central Bank of Sri Lanka (CBSL) has decided to keep the Overnight Policy Rate (OPR) unchanged at 7.75%, following the latest Monetary Policy Board meeting held yesterday (23).

The Bank said the current policy stance remains aligned with its goal of steering inflation towards the 5% medium-term target.

According to the CBSL, headline inflation, based on the Colombo Consumer Price Index (CCPI), turned positive in August 2025, ending an 11-month period of deflation. Inflation is projected to gradually edge upwards and stabilise around the 5% target by mid-2026. Core inflation, reflecting stronger domestic demand, is also expected to rise before stabilising in line with headline inflation.

Sri Lanka’s economy is estimated to have expanded by 4.8% in the first half of 2025, with leading indicators pointing to continued momentum into the third quarter. Private sector credit has seen a notable, broad-based expansion, supported by lower interest rates and a recovery in economic activity, the CBSL noted.

On the external front, the economy remains resilient despite a widening trade deficit, thanks to stronger inflows from tourism and workers’ remittances. Continued net foreign exchange purchases have helped maintain gross official reserves at USD 6.2 billion by end-August, even as the country met debt service obligations.

The Sri Lankan rupee remains broadly stable, while the country’s sovereign ratings have been upgraded by all three major rating agencies, reflecting improved credit standing.

Globally, financial conditions have eased, though geopolitical risks continue to pose uncertainties.

The Monetary Policy Board said it will continue monitoring economic developments and stands ready to take policy action if necessary to ensure inflation stabilises around target while supporting sustainable growth.

The next regular monetary policy review statement will be released on 26 November 2025, the CBSL confirmed.