News Today: Central Bank of Sri Lanka Maintains 8% Interest Rate

The Central Bank of Sri Lanka (CBSL) has decided to maintain its Overnight Policy Rate (OPR) at 8%, reinforcing its commitment to economic stability. CBSL Governor Dr. P. Nandalal Weerasinghe stated that this decision follows an in-depth analysis of both domestic and global macroeconomic conditions. The policy aims to guide inflation towards the 5% target while fostering sustainable economic growth.

The Monetary Policy Board of the CBSL reached this decision during its meeting on January 28, 2025. Recent deflationary trends have largely resulted from administrative energy price cuts. The Colombo Consumer Price Index (CCPI) remained negative for four consecutive months, with a deeper-than-anticipated deflation observed due to the recent electricity tariff reduction.

However, CBSL projects inflation to turn positive by mid-2025 and gradually reach the targeted 5% level. This projection is backed by expected policy adjustments and a recovery in domestic economic activity.

The Sri Lankan economy exhibited notable growth in 2024, surpassing initial expectations. According to the Department of Census and Statistics (DCS), the GDP expanded by 5.5% in Q3 of 2024, following 4.7% growth in Q2. Indicators suggest continued robust growth, reinforcing optimism for 2025.

CBSL highlighted that market lending and deposit interest rates continue to decline, reflecting its accommodative monetary stance. Lower interest rates have spurred credit growth among private sector businesses, facilitating further economic recovery.

With the current trajectory, CBSL remains optimistic about the country’s financial stability, while ensuring inflation remains within target levels.