The economy is estimated to have grown by 4.8 percent this year and leading indicators reflect a continuation of this momentum, while credit to the private sector has recorded a notable and broad-based expansion thus far in 2025, Central Bank Governor Dr Nandalal Weerasinghe said.
“This expansion has been supported by the low interest rate environment and the recovery in economic activity. The continued expansion in private sector credit is expected to further support domestic economic activity in the period ahead, Dr Weerasinghe told the media at the monthly Monetary Policy Review meeting held at the Central Bank head office in Colombo yesterday.
“However, there is no law on using crypto currency as an asset class in Sri Lanka and it raises concerns about money laundering. Since crypto currency is a relatively new thing, no law has been introduced on crypto currency, or virtual currency, Dr Weerasinghe explained.
Dr. Weerasinghe added: “It cannot be used as legal tender in the country as per our Foreign Exchange Act. The problem is, we don’t know if it’s used for money laundering.
“Meanwhile, the Central Bank had decided to keep its policy rate unchanged at 7.75 percent. The stance will support steering inflation towards the target of 5 percent and help to expand economic growth.
“Globally, policy uncertainty has intensified due to the evolving trade landscape and recurring geopolitical conflicts. Headline inflation based on the Colombo Consumer Price Index (CCPI) turned positive in August 2025, ending eleven months of deflation.
“Inflation is projected to gradually increase towards the target of 5% by mid-2026. Reflecting strengthening domestic demand, core inflation is also expected to pick up and stabilise thereafter around the headline inflation target. Medium term inflation expectations remain anchored around the inflation target.
“The Monetary Policy Board decided to maintain the Overnight Policy Rate (OPR) at the current level of 7.75 percent at its meeting held yesterday. The Board arrived at this decision after carefully considering both domestic and global developments. The Board is of the view that the current monetary policy stance will support steering inflation towards the target of 5 percent.
“The economy is estimated to have grown by 4.8 percent in H1-2025. Leading indicators reflect a continuation of this momentum into Q3-2025. Credit to the private sector has recorded a notable and broad-based expansion thus far in 2025. This expansion has been supported by the low-interest-rate environment and the recovery in economic activity. The continued expansion in private sector credit is expected to further support domestic economic activity in the period ahead”
By Hiran H.Senewiratne
