Inflation expected to return to 5% target after Q2 2027
Sri Lanka’s inflation rate is expected to remain around 8 per cent through the rest of 2026 and into early 2027 before gradually easing towards the Central Bank’s 5 per cent target after the second quarter of 2027.
Central Bank Governor Nandalal Weerasinghe said inflation and other economic risks would continue to be closely monitored as domestic and global conditions evolve.
The Monetary Policy Board has decided to keep the Overnight Policy Rate at 8.75 per cent, taking into account factors including geopolitical tensions in the Middle East and potential El Niño-related risks.
Despite inflationary pressures, Sri Lanka’s economy recorded 4.7 per cent year-on-year growth during the first half of 2026.
Private-sector credit growth has also gradually slowed following recent policy measures.
The Central Bank said monetary and fiscal policies would be adjusted when necessary to limit the impact of higher inflation and manage emerging risks to the economy.
The outlook suggests inflation could remain elevated in the short term before gradually moving closer to the Central Bank’s target from the second half of 2027.
More updates to come on AusNewsLanka.
Source : The Morning News
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