The Central Bank of Sri Lanka (CBSL) has reduced the Overnight Policy Rate (OPR) by 25 basis points to 7.75%, following the Monetary Policy Board meeting on May 21.

The decision aims to support inflation targeting at 5%, amid subdued inflationary pressures and ongoing global uncertainties. The CBSL expects inflation to turn positive in Q3 2025, with core inflation rising gradually.

Despite a modest depreciation of the Sri Lankan Rupee, the external sector remains strong, supported by remittances and tourism inflows. The CBSL also expects lending rates to decline further, boosting credit expansion in key sectors.

The Board affirmed that it will monitor both local and international economic developments and take further action if needed to maintain macroeconomic stability.