CBSL holds policy rate at 8.75% as August current account returns to surplus

The Central Bank of Sri Lanka (CBSL) kept its main interest rate unchanged, in a decision announced on 30 September 2026. The Monetary Policy Board decided to "maintain the Overnight Policy Rate (OPR) at the current level of 8.75%", according to the CBSL release. The Morning reported the same decision on the day.

The CBSL gave this background:

• Inflation: Headline inflation rose to 8.0% year on year in August 2026, which the CBSL linked to energy price pass-through. It expects inflation to stay in the high single digits through the first quarter of 2027 before easing towards the 5% target. Core inflation also rose.
• Growth: Real GDP grew 4.7% year on year in the first half of 2026.
• Reserves: Gross official reserves reached US$6.9 billion at the end of August 2026, helped by the Central Bank's net foreign exchange purchases.
• Rupee: The rupee appreciated against the US dollar in July and August, then moved in a mixed way in September.
• Credit: Private sector credit growth is slowing gradually, but the CBSL expects credit flows to remain "sufficient to support economic activity."

The CBSL said it will stay "data-dependent in its policy decisions" and "stands ready to take timely and appropriate measures" if needed. The next policy review is due on 20 November 2026.

External sector, August 2026. On the same day, the CBSL published its External Sector Performance report for August. It said the current account recorded a surplus of US$133 million in August, ending four months of deficits. For January to August the current account was still in deficit by US$291 million.

The merchandise trade deficit for January to August reached US$7.2 billion, compared with US$4.3 billion a year earlier. Fuel import spending fell for a fourth month in a row in August, but fuel imports for the eight months totalled about US$4.0 billion, up 61.6% year on year. Vehicle imports were US$189 million in August, down 24.2% from August 2025, with US$1,684 million for January to August.

Other flows: workers' remittances were US$749 million in August, up 10.0%. Tourism earnings were US$264 million, up 2.1%. The services surplus was US$220 million, down 24.4%. The CBSL said the rupee had depreciated 6.3% against the US dollar by the end of September. Newswire also reported the surplus and these figures on 1 October.

• Borrowing costs stay where they are for now. With the OPR unchanged at 8.75% until at least the November review, importers and exporters using overdrafts, import loans or packing credit should not expect a policy-driven change in rates before then. Bank lending rates are set by each bank and can still move.
• Inflation is still above target. The CBSL's own projection keeps inflation high into early 2027, and it says it is ready to act if pressures build. That leaves some risk of tighter conditions later.
• The trade gap is wide. A US$7.2 billion eight-month trade deficit, driven largely by the fuel bill, is a reminder of how sensitive Sri Lanka's external position is to oil prices.
• The rupee is weaker this year. A 6.3% fall against the dollar by end-September raises the rupee cost of imports priced in dollars.

For background on how rate changes affect traders, see our earlier post on the policy rate and our post on remittances and reserves.

1. Talk to your bank about your working capital lines before the 20 November review, and ask how your rates are set.
2. Price dollar-based import contracts with the weaker rupee in mind, and check your bank's selling rate on the day you pay.
3. Watch fuel-linked costs, such as freight surcharges and local transport, which follow energy prices.
4. Keep an eye on the CBSL's next external sector report for September figures.