COLOMBO (News 1st) -The Monetary Policy Board decided to maintain the Overnight Policy Rate (OPR) at the current level of 7.75% at its meeting held yesterday. The Board arrived at this decision after carefully considering both domestic and global developments. 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) turned positive in August 2025,ending eleven months of deflation. Inflation is projected to gradually increase towards the target of 5% by mid-2026. Reflecting strengthening domestic demand, core inflation is also expected to pickup, and stabilise thereafter around the headline inflation target. Medium term inflation expectations remain anchored around the inflation target. The economy is estimated to have grown by 4.8% in H1-2025. Leading indicators reflect a continuation of this momentum into Q3-2025. Credit to the private sector recorded a notable and broad-based expansion thus far in 2025. This expansion has been supported by the low-interest-rate environment andthe recovery in economic activity. The continued expansion in private sector credit is expected to further support domestic economic activity in the period ahead. The external sector remained resilient, supported by improved inflows from tourism and workers’ remittances, despite a widening trade deficit. Continued net foreign exchange purchases by the Central Bank have helped maintain gross official reserves at US dollars 6.2 billion by end August, amidst debt service payments. The Sri Lanka rupee remains broadly stable. All three major rating agencies have now raised Sri Lanka’s sovereign ratings, confirming the improved credit standing.
Source: News 1st
