Sri Lanka's Central Bank decided to keep its overnight policy rate unchanged at 8.75% for a second consecutive meeting on Wednesday, September 30, 2026, to support an economic recovery that has begun to slow amid rising inflationary pressure from the Iran war and higher oil prices. Sri Lanka's inflation rose to 8% in August, far above the central bank's target of 5%. Meanwhile, a delegation from the International Monetary Fund, or IMF, which visited Sri Lanka recently, urged policymakers to prepare for inflationary pressure and to adhere to the current inflation-targeting framework. Sri Lanka's economy grew 4.2% in the three months ending in June, slowing from 5.1% in the previous quarter and below economists' expectations, as the country continues to recover from the 2022 default crisis and the impact of cyclones late last year. However, Fitch Ratings upgraded Sri Lanka's credit rating last week, citing the country's stronger ability to withstand global economic shocks.
Sri Lanka's central bank held its policy rate at 8.75% amid 8% inflation, a foreign policy-rate decision with no direct read-through to SOFR.
Fitch Ratings upgraded Sri Lanka's credit rating last week, citing stronger resilience to global shocks — a positive development for Fitch's ratings business.
