Sri Lanka, July 23 -- The Central Bank left its key policy rate unchanged this week but struck a more cautious tone on the inflation outlook, indicating that the policymakers remain prepared to tighten the monetary conditions further, if the price pressures persist amid the renewed geopolitical tensions in the Middle East.

The Monetary Policy Board kept the Overnight Policy Rate at 8.75 percent, saying the decision reflected the evolving domestic and global conditions. However, the accompanying policy statement suggested the Central Bank remains focused on containing inflation rather than pivoting towards easing monetary policy.

Headline inflation accelerated to 6.8 percent year-on-year in June, driven mainly by the higher domestic ene...