COLOMBO, May 26 (Bond.az) - Sri Lanka's central bank stunned markets by raising its policy rate by 100 basis points to 8.75%, the biggest hike in four years.
The move aims to stem inflation and support the currency, battered by soaring energy prices due to the Iran war.
Economists had expected only a 25-bp hike. Governor Weerasinghe said the hike will help stabilize exchange rates and inflation.
Annual inflation jumped to 5.4% in April from 2.2% in March. Fuel prices rose 40% due to the energy shock.
This is the largest rate increase since March 2023. Growth forecasts have been cut, with the central bank now expecting 4-5% growth.
