Central Bank of Sri Lanka keeps overnight policy rate unchanged

CBSL projects gross domestic product (GDP) will grow by 4.5 per cent this year, after expanding by 5 per cent last year. Inflation is likely to accelerate more gradually than its earlier projection and hit the central bank’s 5-per cent target by the second half of 2026.

The Central Bank of Sri Lanka kept its policy interest rate unchanged today.
It held the overnight policy rate at 7.75 per cent.
It projects GDP will grow by 4.5 per cent this year, after 2024’s 5-per cent expansion.
Inflation may accelerate more gradually than its earlier projection and hit the bank’s 5-per cent target by the second half of 2026.
Foreign exchange reserves will reach close to $7 billion.

The board is of the view that the current monetary policy stance will support steering inflation towards the target, the central bank said in a release.

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, the release noted.

The central bank has kept the rate steady since May this year as Sri Lanka continues its recovery from a 2022 financial crisis resulting from by a collapse in foreign currency reserves.

The International Monetary Fund’s executive board is due to approve a $347 million tranche of the global lender’s $2.9-billion loan programme with Sri Lanka next month.

The country’s foreign exchange reserves will reach close to $7 billion, the highest since the crisis, CBSL said.

Fibre2Fashion News Desk (DS)