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Monetary Policy: CBSL keeps OPR unchanged at 8.75%

The Central Bank of Sri Lanka’s Monetary Policy Board decided to maintain the Overnight Policy Rate (OPR) at 8.75%, based on evolving domestic and global economic conditions, including the effects of monetary policy tightening introduced in May 2026, according to the official statement made by CBSL.

Further, the statement acknowledged that the decision had been made considering the uncertainty linked to geopolitical tensions in the Middle East and potential risks from El Niño conditions.

Headline inflation increased to 8.0% in year-on-year terms in August 2026, driven by the impact of higher energy prices across several sectors. The Central Bank expects inflation to remain in the high single digits through the first quarter of 2027 before gradually easing towards the 5% target.

Despite continuing tensions in the Middle East, Sri Lanka’s external sector remained resilient. The current account is estimated to have recorded a surplus in August 2026 after four consecutive months of deficits, supported by moderated merchandise imports and improved earnings from tourism and workers’ remittances.

Gross Official Reserves increased to $ 6.9 billion at the end of August 2026, supported by net foreign exchange purchases by the Central Bank. The Sri Lankan rupee also appreciated against the US dollar in July and August before recording mixed movements in September.

Further, the Central Bank said the recent sovereign rating upgrade is expected to further strengthen market sentiment in the economy.