The Monetary Policy Board has decided to maintain the Overnight Policy Rate (OPR) at 7.75%, following its meeting held yesterday (24).
The decision comes after reviewing domestic and global economic trends, with the Board noting that the current policy stance remains appropriate to guide inflation towards the 5% target.
Headline inflation, measured by the Colombo Consumer Price Index (CCPI), increased for the third consecutive month in October.
However, the Central Bank expects inflation to rise at a more moderate pace than previously projected and gradually move towards the target range by the second half of 2026.
Core inflation is also forecast to pick up slightly as economic demand strengthens, while medium-term inflation expectations remain firmly anchored.
Economic activity continues to show signs of improvement, supported by a notable expansion in private sector credit throughout 2025.
The growth in credit reflects a broader recovery in economic conditions and increased demand—including for vehicle imports—fueled by the low-interest-rate environment.
This momentum is expected to persist in the coming months.
Although imports have risen and widened the trade deficit, strong inflows from tourism and workers’ remittances have helped stabilise the external sector.
Gross Official Reserves remain above USD 6 billion, bolstered by continued foreign exchange purchases by the Central Bank.
Additional inflows from multilateral agencies are anticipated in December, while recent pressure on the rupee has eased due to improved forex liquidity.
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