The Central Bank of Sri Lanka (CBSL) has decided to maintain the Overnight Policy Rate (OPR) at 8.75 per cent, citing prevailing domestic and global economic conditions, including renewed geopolitical tensions in the Middle East and elevated inflation.
Announcing the decision, the Monetary Policy Board said headline inflation accelerated to 6.8 per cent year-on-year in June 2026, primarily due to higher domestic energy and food prices. Inflation is expected to remain above the 5 per cent target in the near term before gradually returning to the target, while core inflation is also projected to remain around that level.
The board noted that renewed tensions in the Middle East have driven up global commodity prices, particularly petroleum, posing downside risks to global economic growth and potential spillover effects on Sri Lanka. It said the monetary policy tightening implemented in May 2026, together with complementary government measures, is expected to moderate credit growth and contain demand-side inflationary pressures over time.
The CBSL said pressures on the external sector have eased somewhat despite continued uncertainty. Gross Official Reserves stood at $6.45 billion at the end of June 2026, while workers’ remittances remained strong and the Sri Lankan rupee has stabilised in recent weeks following recent policy measures.
The Central Bank said it will continue to closely monitor domestic and global developments and stands ready to take further policy action, if necessary, to ensure inflation stabilises around the 5 per cent target while supporting the economy’s medium-term growth potential. The next monetary policy review is scheduled for September 30, 2026. (Newswire)