Sri Lanka’s central bank has decided to keep its policy rate unchanged, stating that the current monetary stance will help stabilise inflation while supporting economic growth. The decision was made following the latest review by the Monetary Policy Board.

The board reached this decision after carefully considering domestic and global developments, the central bank said in its policy statement. 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% target by the end of the year.

The announcement followed the board’s meeting on Tuesday, where policymakers assessed economic conditions.

“The board remains confident that the prevailing monetary policy stance will ensure inflation moves towards the target of 5% while supporting domestic economic growth,” the central bank said in a statement.

The central bank also noted that 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,” the statement said, adding that robust private-sector credit flows are expected to support domestic economic activity.

CBSL said it remains vigilant to global trade and geopolitical risks, pledging a “forward-looking and data-dependent approach” to future policy decisions.

The next monetary policy review is scheduled for 28 May.