Sri Lanka raises rates 100 basis pointsrates 100 basis points as West Asia crisis hits markets
Sri Lanka’s central bank raised its benchmark policy rate by 100 basis points on Tuesday, May 26, 2026, in a surprise move to curb inflation and support the rupee.
Policymakers said soaring energy prices tied to the West Asia conflict are increasing pressure on the economy, making the decision important for a country that relies heavily on imported fuel and external financing.
- Sri Lanka has repeatedly faced balance-of-payments stress because it imports most of its fuel.
- Central banks in import-dependent economies often react quickly to energy shocks.
- The rupee has been one of South Asia’s more volatile currencies in recent years.
