CBSL committed to ‘forward-looking and data-dependent approach’ in policy making

The Central Bank remains vigilant to global trade and geopolitical risks, pledging a “forward-looking and data-dependent approach” to future policy decisions, Central Bank of Sri Lanka Governor Dr Nandalal Weerasinghe said.

The Governor said that the Central Bank has decided to keep its policy rate unchanged at 8.00 percent, stating that the current monetary stance will help stabilise inflation.

“This will also support economic growth. The decision was made following the latest review by the Monetary Policy Board, Dr. Weerasinghe told the post-CBSL monthly monetary policy review press conference yesterday held at Central Bank head office in Colombo.

He said that the CBSL board reached this decision after carefully considering domestic and global developments.

Dr. Weerasinghe added: “Inflation remains negative at present, mainly due to repeated reductions in electricity tariffs and fuel prices. However, deflationary conditions are expected to ease from March 2025, with inflation projected to turn positive by mid-2025 and reach the 5 percent target by the end of the year.

“The board remains confident that the prevailing monetary policy stance will ensure inflation moves towards the target of 5 percent while supporting domestic economic growth.

“Foreign inflows to the securities market have risen recently reflecting improved confidence. Increased net foreign purchases by the Central Bank and the receipt of the fourth tranche of the IMF-EFF programme helped increase official reserves enhancing resilience. The Sri Lankan rupee has seen a marginal depreciation thus far in 2025.

“Sri Lanka’s economy showed strong recovery in 2024 after two years of contraction, with key indicators pointing to continued growth. Market interest rates have continued to decline in line with the eased monetary policy stance. Further, robust private-sector credit flows are expected to support domestic economic activity.”

By Hiran H Senewiratne