What the Overnight Policy Rate is
The Overnight Policy Rate (OPR) is the interest rate the Central Bank of Sri Lanka uses to signal its monetary policy. The Central Bank's policy rates page defines it as the policy interest rate under a single policy rate mechanism, in force from 27 November 2024. It works by steering the Average Weighted Call Money Rate, the rate licensed commercial banks charge each other for overnight loans, to sit at or around the OPR. The Central Bank does that through its open market operations, the repo and reverse repo auctions in which it adds or drains liquidity, which its concept note on the OPR ties to the OPR.
The rate is set by the Monetary Policy Board, created by the Central Bank of Sri Lanka Act No. 16 of 2023, with the aim of keeping headline inflation at the 5% target agreed with the government. The Board reviews it at scheduled meetings, six in 2025, and the Central Bank announces each decision in a Monetary Policy Review press release the day after the meeting. Most reviews leave the rate unchanged, so the history below records only the days it moved.
From a corridor to a single rate
Until November 2024 the Central Bank signalled policy with two rates: the Standing Deposit Facility Rate, which it pays banks on overnight deposits, and the Standing Lending Facility Rate, which it charges on overnight loans. The call money rate could settle anywhere between them, and the concept note explains why that became a problem: banks and the public could not tell whether the Central Bank wanted short-term rates near the floor, the ceiling or the middle, and lenders priced loans off different rates in the corridor.
The Monetary Policy Review of 27 November 2024 introduced the OPR and stopped treating the two standing facility rates as policy rates. They still exist, now fixed at 50 basis points below and above the OPR, and they still bound the overnight market. Their full history, back to 2000, is on the standing facility rates tracker. Read the two together for any comparison before and after November 2024: the OPR sits where the middle of the old corridor would be.
How a change reaches your loan or housing loan
How fast a move in the OPR reaches you depends on how your loan is priced. The concept note describes policy rates as the benchmarks banks use to price loan and deposit products, so a change feeds through as banks reprice.
- Variable-rate loans are usually written as a reference rate plus a margin, reset on dates in your agreement. A common reference is the Average Weighted Prime Lending Rate, which moves after the OPR as banks adjust what they charge their best customers; the Central Bank itself used it for the housing loans in its 2020 order on mortgage-backed housing loans. Your offer letter names the reference rate and how often it resets.
- Fixed-rate periods, often the first few years of a housing loan, do not move until the fixed period ends.
- New loans are priced on the day: a cut lowers the rates on offer once banks pass it on, and the Board said in its review of 22 May 2025 that it expected lending rates to adjust.
To see what a different rate does to a monthly instalment, put it into the mortgage calculator or the loan calculator.
How it reaches your savings
Deposit rates follow the same path. A fixed deposit keeps the rate it was opened at until it matures, so a cut matters when you renew, while savings accounts can be repriced at any time. The Central Bank publishes the average rates banks pay on new deposits each month in its monetary sector tables. The savings goal calculator and the compound interest calculator take the rate your bank quotes you, not the OPR.
Reading the chart and the table
The chart draws the OPR as steps, because it stays where the Board set it until the next change. Each point is dated as the Central Bank's own table dates it, which is the date of the press release; the Board meets the day before. The first point is the rate the OPR was introduced at, not a change from an earlier OPR. The series is short because the rate is new: for the years before, use the corridor tracker.