FX.co ★ Sri Lanka Holds Policy Rate at 7.75%

In its July 2025 meeting, the Central Bank of Sri Lanka opted to maintain its benchmark interest rate at 7.75%, aiming to align inflation with the 5% target while bolstering the economic recovery underway. The Standing Lending Facility Rate was also left unchanged at 8.25%, with the Standing Deposit Facility Rate steady at 7.25%. This decision comes amid signs of abating deflation, as inflation is expected to become positive in the third quarter and gradually align with the target. Core inflation is anticipated to rise as demand conditions improve. On the GDP front, the economy witnessed a 4.8% expansion in the first quarter of 2025, with indicators pointing to sustained growth momentum. Credit to the private sector has remained strong and wide-ranging, aided by decreasing market rates. Internationally, while Sri Lanka's trade deficit has widened, tourism and remittance inflows have remained strong. The next policy review is slated for September 24, 2025.