Sri Lanka's inflation is expected to slow back toward the central bank's target of 5% over the second half of this year and into next year, according to Governor Nandalal Weerasinghe. "We are now seeing a stabilizing situation, partly due to the monetary policy measures we had in May and also some of the measures brought in by the government to curtail imports," Weerasinghe said in an interview in Sydney.

The governor is part of a Sri Lankan delegation visiting to attract investors to the Colombo Stock Exchange. The central bank's monetary tightening and government import restrictions have helped stabilize the economy after a severe crisis.

Weerasinghe expressed confidence that the disinflation trend will continue, with growth also moderating as the economy adjusts to tighter policy settings. The delegation's investor outreach aims to deepen capital markets and support the recovery.