Sri Lanka jolts markets with outsized 100-bp rate hike to counter Gulf crisis
The move, expected by few economists, aims to curb inflation and support the rupee as energy costs and foreign reserve pressure rise.
- On Tuesday, the Central Bank of Sri Lanka raised its overnight policy rate by 100 basis points to 8.75% from 7.75%, marking its first monetary tightening in three years as policymakers sought to stem inflation and support a currency buckling under soaring energy prices.
- Annual inflation surged from 2.2% in March to 5.4% last month, exceeding the central bank's 5% target, while Sri Lanka faced a 40% fuel price hike from the Iran war-driven energy shock, forcing rationing and public holidays on Wednesdays.
- Only one of 10 economists surveyed by Bloomberg anticipated the full 100-basis-point increase; Saurav Anand, economist at Standard Chartered Plc, said the hike was 'double our expectations for a 50-basis-point move.'
- Udeeshan Jonas, strategy head at Colombo-based equity research firm CAL, said the hike signals 'the CBSL is shifting gears from supporting growth to defending price stability,' with the central bank seeing risk of another 25-50 basis points of tightening if pressures exceed estimates.
- The IMF Executive Board meets Wednesday to decide whether Sri Lanka receives $700 million under its programme, as Asian central banks including Bank Indonesia and Bangko Sentral ng Pilipinas deploy similar aggressive rate hikes to defend currencies amid regional inflation pressures.
16 Articles
16 Articles
Sri Lanka Delivers Full-Point Rate Hike to Crimp Inflation
(Bloomberg) — Sri Lanka’s central bank raised its benchmark rate by a full percentage point — its first monetary tightening in three years — as policymakers sought to rein in mounting inflation pressures fueled by higher energy costs linked to the Iran war.
Channel News Asia
Sri Lanka jolts markets with outsized 100-bp rate hike to counter Gulf crisis
COLOMBO, May 26 : Sri Lanka's central bank stunned markets by raising its benchmark policy rate by an outsized 100 basis points on Tuesday, as policymakers scrambled to stem inflation and support a currency buckling under soaring energy prices. The Central Bank of Sri Lanka CBSL) raised the overnight policy
Sri Lanka’s Central Bank Governor Announces Additional Measures for Price Stability Following Interest Rate Increase
Sri Lanka’s Central Bank Governor, Nandalal Weerasinghe, indicated that the institution has the capability to employ additional tools to ensure price stability, following the monetary […] The post Sri Lanka’s Central Bank Governor Announces Additional Measures for Price Stability Following Interest Rate Increase appeared first on FINANCIAL CHRONICLE.
Sri Lanka rate decision surprises markets as rupee slides
The move also signalled the likelihood of further monetary tightening as rising energy costs fuel inflation and continue to weaken the country’s currency, News.Az reports, citing Reuters. The South Asian nation’s economic growth, which had only recently begun recovering from the devastating 2022 financial crisis that severely impacted businesses and households, is now expected to face additional pressure due to instability linked to the Middle E…
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