Monetary Policy Review - No. 6 of 2025
Monetary Policy
Published · Source: CBSL Monetary Policy Review ↗
The Central Bank of Sri Lanka has decided to keep the Overnight Policy Rate (OPR) unchanged at 7.75%. This decision was made during the Monetary Policy Board's meeting, after evaluating both domestic and global economic developments. The Board believes that maintaining the current monetary policy stance will help steer inflation towards the target of 5%. Headline inflation, based on the Colombo Consumer Price Index (CCPI), has been accelerating for three consecutive months, and is expected to rise more gradually than previously projected, reaching the target by the second half of 2026.
Economic indicators suggest continued growth momentum, with a significant expansion in credit to the private sector in 2025, supported by a low-interest-rate environment. This reflects a recovery in economic activity and pent-up demand for vehicle imports. Although imports have increased, contributing to a widening trade deficit, strong inflows from tourism and remittances have mitigated the impact on the external current account. Gross Official Reserves have remained above USD 6 billion, bolstered by net foreign exchange purchases by the Central Bank.
The Central Bank is prepared to implement necessary policy measures to stabilize inflation around the target while supporting economic growth. The first statement on the monetary policy review for 2026 will be announced in due course. The inflation target of 5% was established under the Monetary Policy Framework Agreement signed in October 2023.
Key numbers
| Indicator | Value | Change | Period |
|---|---|---|---|
| Overnight Policy Rate | 7.75% | ||
| Inflation Target | 5% | ||
| Gross Official Reserves | USD 6 billion |
Official Announcement
[Confidential] Economic Research Department 26 November 2025
Monetary Policy Review: No. 06 – November 2025
The Central Bank of Sri Lanka keeps the Overnight Policy Rate (OPR) unchanged
The Monetary Policy Board, at its meeting held yesterday, decided to maintain the Overnight Policy Rate (OPR) at the current level of 7.75%. The Board arrived at this decision after carefully considering evolving developments and the outlook on both domestic and global fronts. The Board is of the view that the current monetary policy stance will support steering inflation towards the target of 5%.
Headline inflation based on the Colombo Consumer Price Index (CCPI) continued to accelerate in October for the third consecutive month. Inflation is expected to rise more gradually than projected earlier and move towards the target by H2-2026. Core inflation is also expected to accelerate at a modest pace, as demand in the economy gradually strengthens. Medium-term inflation expectations remain well anchored around the inflation target.
Leading economic indicators suggest a continuation of the growth momentum. Credit to the private sector has recorded a notable and broad-based expansion thus far in 2025, supported by the low-interest- rate environment. This also reflects a recovery in economic activity as well as the realisation of pent- up demand for vehicle imports. This credit momentum is likely to continue in the period ahead.
Imports have risen in recent months, contributing to a widening trade deficit. However, strong inflows from tourism and workers’ remittances have cushioned the impact on the external current account.
Gross Official Reserves were maintained above USD 6 billion thus far in 2025, supported by net foreign exchange purchases by the Central Bank. Expected additional inflows in December 2025 include receipts from the multilateral organisations. The recent depreciation pressure on the rupee has subsided with the improvement in foreign exchange liquidity.
The Central Bank will continue to monitor and assess incoming data on evolving domestic and global economic conditions 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.
The date of release of the first statement on the monetary policy review for 2026 will be announced in due course.
This includes the swap facility from the People’s Bank of China.
Annexure 01:
Headline Inflation Projections* (Quarterly, CCPI, Y-o-Y, %)
Based on the Projections during the November 2025 Monetary Policy Round
Realised Inflation — Inflation Target (5%) **
Source: Central Bank Staff Projections ** The inflation target (5%) was agreed under the Monetary Policy Framework Agreement (MPFA) signed between the Central Bank and the Minister of Finance in October 2023.
* Realised data in the fan chart are based on the CCPI (2021=100, seasonally adjusted). Projections are based on all available data at the forecast round in November 2025.
The confidence bands show the increasing uncertainty in forecasting inflation over a longer horizon.
Note: A forecast is neither a promise nor a commitment.
Data Annexure is accessible at https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/mpr06_2025_e.pdf
View the official document (PDF) ↗
Source: CBSL Monetary Policy Review ↗