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CCPI in May 2025 indicates a continued easing of deflationary conditions

The easing of deflationary conditions continued in May 2025, in line with the Central Bank’s near-term projections. Accordingly, the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100)  reflected a slower pace of headline deflation at 0.7% in May 2025 compared to the deflation of 2.0% recorded in April 2025

External Sector Performance – April 2025

Reflecting the resilience of the external sector, the monthly current account has remained in surplus since January 2025.

The merchandise trade deficit widened in April 2025 compared to both April 2024 and March 2025. This was as a result of merchandise imports growing at a higher pace (17.5 %, y-o-y), mainly driven by imports of motor vehicles (US dollars 134 million), compared to the growth in merchandise exports (10.4 %, y-o-y).

Sri Lanka PMI - Construction indicates a seasonal contraction in April 2025

Reflecting the seasonal slowdown in construction activities during the Sinhala and Tamil New Year period, Sri Lanka Purchasing Managers’ Index for Construction (PMI - Construction), as indicated by the Total Activity Index, declined to 41.4 in April 2025. However, the seasonal dip in April 2025 was less pronounced than in the corresponding month in the previous year. Survey respondents mentioned that most of their construction sites were temporarily closed for an extended period during the month due to the New Year celebrations.

Central Bank of Sri Lanka holds the Financial Stability Conference to celebrate the 75th Anniversary

The Central Bank of Sri Lanka held the Financial Stability Conference on 23 May 2025 in Colombo, to celebrate its 75th anniversary and as a landmark event to highlight Sri Lanka’s success story in overcoming economic challenges faced during the recent past while preserving the financial system stability. Bringing together regional and international expertise, the Conference provided a valuable opportunity for sharing experiences and insights on financial stability challenges and policy responses, benefiting both domestic stakeholders and international participants. 

Central Bank of Sri Lanka hosted the FSB RCG Asia Meeting in Colombo on 22 May 2025

Financial Stability Board (FSB) Regional Consultative Group for Asia (RCG Asia) met on 22 May 2025 in Colombo. Central Bank of Sri Lanka hosted the meeting for the second time, following the successful hosting of the RCG Asia meeting in April 2024.

The Central Bank of Sri Lanka further reduces the Overnight Policy Rate (OPR)

The Monetary Policy Board decided to reduce the OPR by 25 bps to 7.75% at its meeting held yesterday, thereby easing monetary policy further. The Board arrived at this decision after carefully considering the developments both domestically and globally. The Board is of the view that this measured easing of monetary policy stance will support steering inflation towards the target of 5%, amidst global uncertainties and current subdued inflationary pressures. 

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