The Central Bank of Sri Lanka has decided to maintain the Overnight Policy Rate (OPR) at the current level of 7.75%.
The Monetary Policy Board reached this decision at a meeting on 24 March 2026, after reviewing domestic and global developments, with particular attention to uncertainties arising from the ongoing Middle East conflict.
The CBSL noted that rising global energy prices and trade disruptions due to escalating geopolitical tensions have necessitated significant upward adjustments in domestic energy prices. Despite this, inflation remains low at 1.6% year-on-year in February 2026, well below the 5% target, providing room to absorb the impact of higher energy costs. Inflation is now expected to reach the 5% target in Q2-2026, earlier than previously projected, and is anticipated to remain near the target thereafter.
Sri Lanka’s economy recorded strong real growth of 5.0% in 2025, despite disruptions caused by Cyclone Ditwah at the end of the year. Leading indicators suggest a robust post-Cyclone recovery in early 2026. However, prolonged conflict in the Middle East could pose risks to domestic economic activity.
The CBSL reported that the external sector remained resilient in the first two months of 2026, supported by stronger export earnings, higher remittances, and increased tourism revenues. Gross Official Reserves rose to USD 7.3 billion by the end of February, with the Central Bank purchasing significant amounts of foreign exchange during this period.
The ongoing Middle East conflict continues to pose risks to Sri Lanka’s external sector, potentially affecting energy, tourism, trade, and remittance flows, though the full impact remains uncertain. The Sri Lankan rupee has stayed relatively stable in early 2026, with some depreciation pressures observed similar to regional peers.
The CBSL emphasized that the Monetary Policy Board is prepared to implement appropriate measures to stabilise inflation around the target while supporting economic growth. The next monetary policy review statement will be released on 26 May 2026.
