CB keeps policy rate unchanged at 7.75% as inflation outlook holds

The Central Bank yesterday left its key policy rate, the Overnight Policy Rate (OPR), unchanged at 7.75 percent, while signalling an accommodative monetary stance, as the Monetary Policy Board is of the view the current policy setting is appropriate to steer inflation towards its medium-term target of around 5 percent.

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At its first monetary policy meeting for the year, the Central Bank maintained the OPR at 7.75 percent, with a 50-basis-point margin on either side for the standing facilities for the banks.

The statutory reserve ratio for the banks was also kept unchanged at 2 percent.

The Central Bank has not cut the policy rates since May 2025, when it reduced the OPR by 25 basis points to accelerate the return of inflation, as the economy was experiencing a phase of deflation.

"The board arrived at this decision after carefully considering the evolving developments and the outlook on the domestic front and global uncertainties. The board is of the view that the current monetary policy stance will support steering inflation towards the target of 5 percent," the Central Bank said in its statement. “The board remains prepared to implement appropriate policy measures to ensure that inflation stabilises around the target, while supporting the economy to reach its potential,” it added.

The Central Bank said the slight acceleration in inflation in December 2025 was driven by higher food prices, reflecting the supply-side and supply-chain disruptions caused by the floods in early December.

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In contrast, the same period last year recorded negative Rs.1.57 billion, excluding fair value gains. The Cinnamon Life and Nuwa hotels were well received by both local and international markets, while casino operations showed steady improvement.

The leisure segment recorded a strong performance, supported by higher occupancy amid the increased arrivals.

Meanwhile, West Container Terminal (WCT-1) continued a steady month-on-month growth in throughput, achieving a positive profit after tax ahead of expectations, despite recognising depreciation and some finance expenses related to phase one, with phase two expenses capitalised following the start of operations.