The Monetary Policy Board of the Central Bank of Sri Lanka (CBSL) has decided to maintain the Overnight Policy Rate (OPR) at 8.00%, expressing confidence in its current monetary stance to guide inflation towards the 5% targetwhile supporting economic growth.
The decision was made during the Board meeting on March 25. In its monetary policy review statement, CBSL highlighted that inflation remains negative due to repeated electricity tariff and fuel price reductions but is expected to turn positive by mid-2025 as deflationary conditions ease.
CBSL reported that Sri Lanka’s economy recorded a strong recovery in 2024 after two years of contraction, with indicators suggesting continued growth momentum. Other key takeaways include:
- Market interest rates have continued to decline, in line with the eased monetary policy stance.
- Credit flows to the private sector remain strong, supporting domestic economic activity.
- External sector performance has been better than expected, with robust exports, rising imports, and a widened trade deficit.
- Earnings from tourism and worker remittances have strengthened the external current account.
- Foreign inflows into government securities have increased, reflecting improved investor confidence.
- Sri Lanka’s foreign reserves have grown, supported by increased net foreign purchases by CBSL and the fourth tranche of the IMF-EFF programme.
While the risks to inflation and growth remain balanced, CBSL remains watchful of global trade and geopolitical uncertainties. It reaffirmed that monetary policy decisions will be data-driven to maintain price stability and sustain economic growth.
The next monetary policy review statement is scheduled for May 28, 2025.
