Sri Lanka Interest Rate

The Central Bank of Sri Lanka lowered its benchmark interest rate to 7.75% during its May 2025 meeting, marking the first policy easing of the year and reinforcing its commitment to the 5% inflation target while supporting the ongoing economic recovery. The Standing Lending Facility Rate and Standing Deposit Facility Rate were also reduced to 8.25% and 7.25%, respectively. The decision comes as deflationary conditions have begun to ease since March, with inflation now projected to turn positive by early Q3 and gradually align with the target. Core inflation and expectations are also stabilizing. Meanwhile, strong private sector credit growth and falling market lending rates continue to support domestic activity. On the external front, Sri Lanka’s reserves have strengthened due to net forex purchases, despite a widening trade deficit. Tourism revenues and remittances have helped stabilize the external sector, although the rupee has seen some depreciation in 2025.