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The Central Bank of Sri Lanka Publishes the Market Operations Report – June 2026

The Central Bank of Sri Lanka (CBSL) released its latest Market Operations Report (MOR) on 31 July 2026. The MOR aims to enhance stakeholder understanding of the monetary and foreign exchange operations undertaken by the CBSL in the pursuit of implementation of monetary policy within the Flexible Inflation Targeting (FIT) framework, supported by the flexible exchange rate regime.

The latest MOR provides an overview of the policy stance of the CBSL, liquidity conditions, short-term interest rate and exchange rate developments, as well as money market and domestic foreign exchange market operations of the CBSL, with a particular focus on the first half of 2026. The MOR also presents two feature articles on timely topics and includes selected indicators of market operations and transactions. 

Key Highlights:

CCPI-based headline inflation accelerated in July 2026

The Colombo Consumer Price Index  (CCPI, 2021=100) based headline inflation (year-on-year, Y-o-Y) increased to 7.3% in July 2026 from 6.8% in June 2026, primarily reflecting the adjustment in housing rent in the non-food category and the base effect in food inflation. Meanwhile, food inflation (Y-o-Y) accelerated to 6.3% in July 2026 from 3.6% in June 2026, contributing mainly to the increase in headline inflation, while non-food inflation (Y-o-Y) decelerated to 7.8% in July 2026 from 8.4% in June 2026.

External Sector Performance - June 2026

The external sector continued to reflect the impact of developments in the Middle East, with the monthly current account recording a deficit in June 2026.

Sri Lanka PMI - Construction expanded in June 2026

The Sri Lanka Purchasing Managers’ Index for Construction (PMI - Construction), as reflected by the Total Activity Index, increased to 60.0 in June 2026, indicating continued expansion in construction activities. Most survey respondents attributed this increase to the ongoing execution of construction projects awarded in preceding months.

The Central Bank of Sri Lanka keeps the Overnight Policy Rate (OPR) unchanged

The Monetary Policy Board, at its meeting held yesterday, decided to maintain the Overnight Policy Rate (OPR) at the current level of 8.75%. The Board arrived at this decision after carefully considering the evolving conditions and outlook on the domestic and global fronts. 

Renewed tensions in the Middle East have resulted in a surge in global commodity prices, particularly petroleum. These developments are likely to dampen global economic prospects with potential spillovers to the domestic economy through multiple channels.

Administrative Penalties imposed by the Financial Intelligence Unit on Reporting Institutions from October 2025 to March 2026

By virtue of the powers vested under Section 19 (1) read together with section 19 (2) of the Financial Transactions Reporting Act, No. 6 of 2006 (FTRA), financial penalties are imposed on Institutions for non-compliance with the provisions of the FTRA. In terms of the FTRA, the penalty may be prescribed by taking into consideration the nature and gravity of relevant non-compliances of the Institutions.

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