Businesses and borrowers will continue to face unchanged interest rates after the Central Bank kept its Overnight Policy Rate (OPR) at 8.75% following the latest Monetary Policy Board meeting held on Tuesday.
The Central Bank said it decided to leave the policy rate unchanged after reviewing developments in the domestic and global economy. It expects the monetary policy tightening introduced in May 2026, together with other government measures, to gradually slow credit growth and bring inflation back towards its 5% target over the medium term.
Inflation Remains Above Target
Headline inflation rose to 6.8% year-on-year in June 2026, driven mainly by higher food and domestic energy prices. The Central Bank expects inflation to remain above its target in the near term before easing gradually.
It also said economic demand has strengthened, although inflation expectations remain broadly stable. The Bank believes earlier policy measures will help reduce demand pressures and support price stability in the coming months.
Global Risks Continue to Weigh on the Economy
The Central Bank said renewed tensions in the Middle East have pushed up global commodity prices, particularly petroleum. Higher oil prices could weaken global economic growth and create additional pressure on the domestic economy.
Although pressure on the external sector has eased in recent weeks, higher fuel import costs and slower tourism earnings pushed the current account into a deficit from April 2026. The Bank expects recent policy measures to reduce import demand, including demand for motor vehicles, in the months ahead.
Meanwhile, workers’ remittances have remained strong throughout 2026. Gross Official Reserves stood at USD 6.45 billion at the end of June despite foreign debt service payments. The Sri Lanka rupee has also stabilised in recent weeks following policy measures introduced by the Central Bank.
The Central Bank said it will continue to monitor domestic and global developments closely. It added that it stands ready to take further action if needed to ensure inflation returns to the 5% target while supporting sustainable economic growth.
Central Bank of Sri Lanka (CBSL) Numbers & Indexes
Last modified: July 22, 2026
