The Central Bank of Sri Lanka left the Overnight Policy Rate unchanged at 7.75% in its January 2026 monetary policy review, saying the current stance would help steer inflation toward the 5% target while weighing domestic developments and global uncertainties. Inflation measured by the Colombo Consumer Price Index held at 2.1% in December 2025, although food prices rose from November owing to Cyclone Ditwah-related supply disruptions and festive-season demand, and the central bank expects inflation to accelerate gradually toward 5% by the second half of 2026 as core inflation and demand strengthen. The economy expanded 5.0% in the first nine months of 2025 and, despite a late-2025 slowdown after the cyclone, early indicators pointed to resilience, with private-sector credit from commercial banks and other financial institutions continuing to expand strongly amid improving activity, higher vehicle imports and expected post-cyclone rebuilding. On the external side, the current account is estimated to have posted a sizeable surplus in 2025 despite a wider trade deficit, gross official reserves rose to USD 6.8 bn at end-2025, and the Sri Lanka rupee depreciated 5.6% against the USD in 2025 before remaining broadly stable so far in 2026. The Central Bank of Sri Lanka said it remains prepared to take appropriate policy measures to keep inflation stabilised around target while supporting the economy to reach its potential.
Central Bank of Sri Lanka2026-01-28
Central Bank of Sri Lanka Leaves Overnight Policy Rate Unchanged at 7.75%
The Central Bank of Sri Lanka left the Overnight Policy Rate unchanged at 7.75% in its January 2026 monetary policy review, saying the current stance should help steer inflation toward the 5% target amid domestic developments and global uncertainty. Colombo Consumer Price Index inflation was 2.1% in December 2025 and is expected to rise gradually toward 5% in the second half of 2026, while the bank said economic activity remained resilient despite a late-2025 cyclone-related slowdown.