CB Maintains Policy Rate at 7.75% Amid Geopolitical Risks 📈

The Monetary Policy Board of the Central Bank of Sri Lanka has opted to keep the Overnight Policy Rate (OPR) unchanged at 7.75%, balancing robust domestic growth against global uncertainties. • Inflation & Interest Rates: February 2026 inflation stood at a low 1.6% (y-o-y). Due to rising energy prices and Middle East tensions, inflation is now projected to hit the 5% target earlier than expected, by Q2-2026. • Economic Performance: Sri Lanka recorded a strong real GDP growth of 5.0% in 2025. Despite disruptions from Cyclone Ditwah, early 2026 indicators suggest a resilient post-cyclone recovery. • External Sector & Reserves: Gross Official Reserves rose to US$ 7.3 Bn by end-February 2026. The sector is bolstered by steady tourism earnings, remittances, and export growth. The Sri Lankan Rupee remains relatively stable but faces recent depreciation pressure similar to regional peers. • Risk Factors: The primary outlook risk stems from the Middle East conflict, which threatens to impact trade, remittances, and the energy sector if prolonged.