Sri Lanka, Feb. 14 -- The Central Bank of Sri Lanka (CBSL) has released its first Monetary Policy Report for 2026, providing forward-looking insights on inflation, economic growth, and potential risks to the economic outlook.

According to the report, after an eleven-month deflationary period ending in August 2025, inflation returned to positive territory.

The CBSL projects that inflation will gradually move toward the 5% target by the second half of 2026, supported by a gradual recovery in domestic demand, the normalization of energy and transport costs, and relatively elevated food price volatility.

The report notes that core inflation is expected to stabilize in line with the headline inflation target, and the overall balance of risk...