Sri Lanka hikes interest rate by full point to fight inflation
Sri Lanka's central bank raised interest rates for the first time in more than three years on Tuesday as it battles high inflation and a tanking currency fuelled by the Middle East war.
The bank hiked its benchmark interest rate for short-term borrowing by 100 basis points to 8.75 percent, saying the conflict was having a negative impact on domestic prices and stability.
The Middle East war, which began in late February, has effectively closed the Hormuz strait, a vital oil and gas trading corridor, driving up energy prices and stoking global inflation.
"The uncertainties arising from the heightened tensions in the Middle East have prompted global commodity prices, particularly petroleum, to remain high, adversely affecting the global as well as the domestic economy," the Central Bank of Sri Lanka said.
