Releasing the Monetary Policy Report for August 2025, the Central Bank of Sri Lanka says the economy is expected to grow by around 4.5% in 2025.

The Central Bank further said that inflation is projected to reach the target of 5% by mid-2026 with improving demand conditions. 

Core inflation is expected to increase gradually and stabilise in line with the headline inflation target thereafter, it added. 

The Central Bank has released its second Monetary Policy Report for 2025 in keeping with the requirements of the Central Bank of Sri Lanka Act, No. 16 of 2023. 

The biannual Monetary Policy Report provides forward-looking insights about the economy, particularly inflation and economic growth outlook, and risks to projections. 

Through this Report, the Central Bank strives to improve transparency and accountability by communicating the rationale behind its recent monetary policy decisions. 

The contents of this Report are based on information considered by the Monetary Policy Board in formulating the decision during the July 2025 monetary policy review.

The following are key highlights from the report;

• The Central Bank continued its relaxed monetary policy stance, considering subdued demand-driven inflationary pressures. 
• Deflation recorded since September 2024 is expected to end by Q3-2025. 
• Inflation is projected to reach the target of 5% by mid-2026 with improving demand conditions. 
• Core inflation is expected to increase gradually and stabilise in line with the headline inflation target thereafter. 
• The economy is expected to grow by around 4.5% in 2025. 
• Evolving global uncertainties pose challenges to economic growth prospects.

Full report: https://www.cbsl.gov.lk/en/publications/economic-and-financial-reports/monetary-policy-reports (Newswire)

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The Monetary Policy Board of the Central Bank of Sri Lanka has decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 100 basis points (bps) to 9.00 per cent and 10.00 per cent, respectively. 

The CBSL stated that the Board arrived at this decision at its meeting held on 23 November 2023, following a careful analysis of the current and expected developments in the domestic and global economy, with the aim of achieving and maintaining inflation at the targeted level of 5 per cent over the medium term, while enabling the economy to reach and stabilise at the potential level. 

The Board took note of possible upside risks to inflation projections in the near term due to supply-side factors stemming from the expected developments domestically and globally. 

However, the Board viewed that such near-term risks would not materially change the medium-term inflation outlook, as the public’s inflation expectations remain anchored and economic activity is projected to remain below par in the near to medium term. 

Further, the Board viewed that with this reduction of policy interest rates, along with the monetary policy measures carried out since June 2023, sufficient monetary easing has been effected in order to stabilise inflation over the medium term. 

Therefore, the Monetary Policy Board underscored the need for a swift and full passthrough of monetary easing measures to market interest rates, particularly lending rates, by the financial institutions, thereby accelerating the normalisation of market interest rates in the period ahead. 

Full report : https://shorturl.at/pru29 (NewsWire)

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The Central Bank of Sri Lanka (CBSL) has decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 250 basis points.

Accordingly, the Standing Deposit Facility Rate and the Standing Lending Facility Rate have been reduced to 13.00 per cent and 14.00 per cent, respectively.

The decision was taken by the Monetary Board of the Central Bank of Sri Lanka, at its meeting held yesterday (May 31). 

The Monetary Board arrived at this decision with a view to easing monetary conditions in line with the faster-than-expected slowing of inflation, gradual dissipation of inflationary pressures and further anchoring of inflation expectations. 

The CBSL stated that the commencing of such monetary easing is expected to provide an impetus for the economy to rebound from the historic contraction of activity witnessed in 2022 while easing pressures in the financial markets.

Full report: https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20230601_Monetary_Policy_Review_No_4_2023_e_E9qj4.pdf (NewsWire)

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