Sri Lanka Central Bank Hikes Rates By 100 Bps

(RTTNews) - Sri Lanka's central bank raised its benchmark interest rates by 100 basis points on Tuesday, as inflation is expected to remain above the target in the period ahead due to rising oil prices.

The Monetary Policy Board of the Central Bank of Sri Lanka decided to raise its overnight policy rate to 8.75 percent from 7.75 percent.

The previous change in the monetary policy was a quarter-point cut in May 2025.

The board expects inflation to remain above the 5 percent target in the period ahead, before slowing and stabilizing around it.

"In view of the elevated inflation forecast, the potential second-round effects on headline inflation from energy price adjustments, continued expansion in private sector credit fueling import demand, pressures on the external sector, as well as the risk of de-anchoring inflation expectations, the Board was of the view that a tightening of the monetary policy stance is appropriate at this juncture," the bank said in a statement.

Policymakers said the bank stands ready to take measures as appropriate to ensure that inflation stabilizes around the target, while helping the economy to achieve its potential over the medium-term.