Sri Lanka central bank holds interest rate steady ahead of budget, IMF review

COLOMBO: Sri Lanka’s central bank kept its policy interest rate unchanged on Wednesday as it awaited approval of the country’s budget and the latest review from the International Monetary Fund.

The Central Bank of Sri Lanka (CBSL) held the overnight policy rate at 7.75%.

The monetary authority has held rates steady since May as Sri Lanka recovers from a 2022 financial crisis driven by a severe dollar shortage.

A Reuters poll of 13 economists unanimously forecast no change, citing stable inflation, healthy credit growth and consistent economic expansion.

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Inflation is set to accelerate more gradually than earlier projected and reach the central bank’s 5% target by the second half of 2026, CBSL said in a statement.

“Leading economic indicators suggest a continuation of the growth momentum,” the bank said. “Credit to the private sector has recorded a notable and broad-based expansion thus far in 2025, supported by the low interest rate environment.”

CBSL projects Sri Lanka’s economy will grow 4.5% this year, after expanding 5% last year.