Policy interest rate raised to 8.5pc to tame inflation

Bangladesh Bank has raised the policy interest rate again by 50 basis points to 8.5 per cent in a bid to tame inflation prevailing in the country.

The new policy interest rate will be effective from Thursday (May 9).
Bangladesh Bank issued a circular in this regard on Wednesday (May 8).

The circular stated that according to a decision at a meeting of the Committee on Monetary Policy of the Bangladesh Bank on Wednesday, the policy interest rate was raised by 50 basis points to 8.5 per cent from the existing 8.0 per cent.

The meeting was held at the BB head office at Motijheel commercial area in the capital on Wednesday.

Since inflation has been stayed above 9.0 per cent, the BB has been following a contractionary monetary policy in its bid to reduce demand and contain prices.

In order to refine liquidity management, the Standing Lending Facility (SLF) rate has been increased by 50 basis points to 10 per cent.

Besides, the Standing Deposit Facility (SDF) rate has been increased by 50 basis points as well to seven percent, said the circular.

The BB has raised the policy interest rate for several times since May 2022 to increase the cost of borrowing money by the commercial banks.

In the beginning of October last year, for instance, the central bank increased its key policy interest rate by 50 basis points to 7.75 percent -- the largest hike in a decade.

In January this year, the policy rate was again hiked by 25 basis points, fixing at 8.0 percent.


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