The Central Bank of Sri Lanka recently kept its overnight policy rate unchanged at 7.75 per cent considering both global and domestic developments.

The bank had trimmed its benchmark interest rate by 25 basis points in May to support growth.

A statement by the bank said that gross domestic product (GDP) expanded by an annual 4.8 per cent in the first half (H1) this year, with inflation expected to hit its target of 5 per cent by mid-2026.

Reflecting strengthening domestic demand, core inflation is also expected to pick up, and stabilise thereafter around the headline inflation target. Medium term inflation expectations remain anchored around the inflation target, the statement said.

The country is targeting 4.5 per cent GDP growth this year.

The bank’s monetary policy board feels the current monetary policy stance will support steering inflation towards the target of 5 per cent.

Headline inflation based on the Colombo consumer price index (CCPI) turned positive in August this year, ending eleven months of deflation.

A delegation of the International Monetary Fund will be in Colombo soon to conduct another round of review.

Fibre2Fashion News Desk (DS)