Sri Lanka’s central bank has raised its key Overnight Policy Rate (OPR) by 100 basis points to 8.75%, tightening monetary policy as the island nation faces renewed economic pressures.
The decision, announced after Monday’s Monetary Policy Board meeting of the Central Bank of Sri Lanka, comes amid mounting pressure on the Sri Lankan rupee, rising inflation and higher global oil prices linked to tensions in the Middle East.
Authorities have also expressed concern over foreign exchange stability as fuel import costs rise and spending on vehicle imports and energy increases.
In recent weeks, Sri Lanka has witnessed sharp currency volatility and growing inflationary pressures, raising fears of renewed strain on the country’s fragile post-crisis recovery.
Economic analysts had earlier warned that tighter monetary measures could be introduced to curb excessive credit growth, stabilise the rupee and protect foreign exchange reserves.
The latest rate hike is expected to increase borrowing costs across the banking sector, potentially slowing loan demand while encouraging savings and foreign currency inflows aimed at strengthening overall financial stability.
