Overnight Policy Rate Sri Lanka remained unchanged as the Central Bank opted to maintain its current monetary stance, signalling confidence that existing policy settings are sufficient to guide inflation toward its medium-term target amid ongoing global and domestic uncertainty.
Overnight Policy Rate Sri Lanka unchanged as inflation target remains in focus
The Central Bank of Sri Lanka has decided to keep the Overnight Policy Rate at 7.75 percent, signalling continuity in its monetary policy approach as inflation remains on a controlled trajectory. The decision was taken by the Monetary Policy Board at its latest meeting after reviewing domestic economic conditions and external risks facing the economy.
According to the Central Bank, the Board carefully assessed recent economic indicators alongside evolving global developments before concluding that the current policy stance remains appropriate. Policymakers believe that maintaining the existing rate structure will support price stability while allowing economic activity to continue adjusting under more predictable financial conditions.
The Overnight Policy Rate Sri Lanka framework plays a central role in guiding short-term interest rates in the financial system. By holding the rate steady, the Central Bank aims to provide clarity to markets, financial institutions, and businesses at a time when global monetary conditions remain uncertain. Central banks worldwide continue to balance inflation control with growth considerations, making policy predictability a key objective.
Officials reiterated that the primary objective of the current monetary stance is to steer inflation toward the official target of 5 percent. Inflation dynamics in recent months have remained broadly aligned with expectations, allowing policymakers to avoid abrupt adjustments that could unsettle borrowing costs or market sentiment.
The Central Bank noted that domestic conditions have shown gradual improvement, supported by easing price pressures and relatively stable financial market conditions. At the same time, authorities remain cautious, acknowledging that global uncertainties continue to pose risks to inflation and growth. Volatile commodity prices, geopolitical tensions, and shifting global financial conditions remain key factors under close observation.
By maintaining the Overnight Policy Rate Sri Lanka at its present level, the Monetary Policy Board signalled confidence that current interest rates are neither excessively restrictive nor overly accommodative. This balanced stance is intended to support economic recovery while preventing a resurgence of inflationary pressures that could undermine long-term stability.
The Board emphasised that monetary policy decisions will remain data-driven and forward-looking. Future adjustments, if required, will depend on inflation trends, demand conditions, and developments in both domestic and international markets. This approach is designed to ensure that policy responses remain timely and proportionate to emerging risks.
Market participants generally view policy continuity as a stabilising factor, particularly for credit growth and investment planning. Businesses and households benefit from predictable interest rate conditions, which can support consumption, investment, and financial planning over the medium term.
The Central Bank also highlighted the importance of maintaining clear communication with stakeholders. Transparent policy signals, officials noted, help anchor inflation expectations and reinforce confidence in the country’s macroeconomic framework. This is especially critical as Sri Lanka continues to consolidate gains made during its broader economic recovery.
While the decision to keep rates unchanged reflects current confidence in inflation management, authorities stressed that vigilance remains essential. External shocks or unexpected domestic developments could alter the inflation outlook, requiring policy recalibration. As such, the Central Bank will continue to closely monitor economic indicators and global trends.
In the near term, maintaining the existing rate level is expected to support orderly financial conditions and reinforce the credibility of the Central Bank’s inflation-targeting framework. Over the medium term, policymakers aim to sustain price stability while creating an environment conducive to sustainable economic growth.
The decision underscores the Central Bank’s commitment to cautious and consistent policymaking, balancing inflation control with broader economic considerations. As long as inflation remains aligned with the target path, the current policy stance is expected to remain supportive of overall macroeconomic stability.