Sri Lanka Keeps Policy Rate at 8%

The Central Bank of Sri Lanka kept its benchmark interest rate unchanged at 8.00% for the second consecutive meeting in March 2025, reaffirming its commitment to the 5% inflation target while supporting economic growth.

Inflation remains negative, falling by 4.2% year-on-year in February due to a 20% cut in household power tariffs.

However, deflationary pressures are expected to ease from March, with inflation projected to turn positive by mid-year and reach the target by year-end.

On the GDP front, the economy rebounded strongly in 2024 with a better-than-expected 5% growth following two years of contraction, marking a turning point after its worst financial crisis in decades.

The central bank noted that declining market interest rates and strong private sector credit growth will help sustain this momentum.

The central bank also held the Standing Lending Facility Rate at 8.50%, while the Standing Deposit Facility Rate remains at 7.50%.

The next policy review is set for May 28, 2025.