The Central Bank has released its inaugural Monetary Policy Report for 2026 in accordance with the Central Bank of Sri Lanka Act, No. 16 of 2023. This biannual report offers forward-looking insights into the economy, focusing on the outlook for inflation and economic growth as well as risks to the projections. Through this report, the Central Bank aims to enhance transparency and accountability by explaining the rationale behind its recent monetary policy decisions.
The report’s contents are based on data considered by the Monetary Policy Board during its review conducted in January 2026.
Key Highlights
- Ending an eleven-month period of deflation, inflation turned positive in August 2025 and has been gradually accelerating since then.
- Inflation is projected to approach the 5% target by the second half of 2026.
- Core inflation is expected to rise gradually and stabilize around the headline inflation target, driven by strengthening domestic demand.
- The Central Bank has maintained its accommodative monetary policy stance, supported by subdued inflationary conditions in the economy.
- Leading economic indicators suggest continued resilience in economic activity, despite the impact of Cyclone Ditwah.
- However, further escalation of global headwinds and uncertainties could affect overall economic performance.
