As on In 20 March 2025, the interbank call money market saw a slight uptick in interest rates for longer-term maturities compared to 20 February 2025, according to Bangladesh Bank's statistics.
Despite rush in drawings as Eid Ul Fitr is ahead, the hike in call money rate is not tangible which usually happens this time every year. In this regard a senior banker said banks are resorting to repo and from standing lending facilities (SLF) from BB as a result liquidity sufficiency is enough in most of the banks.
Currently the central bank's repo rate is 10 per cent and the SLF is 11.5 per cent.
While the overnight rates remained relatively stable, the rates for Short Notice and Term products (over a weak) edged higher, reflecting tighter liquidity conditions and cautious trading behavior among banks.
This shift highlights the ongoing impact of Bangladesh Bank's monetary policy measures and seasonal adjustments during Ramadan.
In February 20, the call money rate held steady at around 10.04 per cent, a stability achieved after the central bank raised the policy rate to 10 per cent in October 2024. This move was part of broader efforts to control inflation and tighten the money supply.
By March 20, however, the average overnight rate dipped slightly to 10.01 per cent, showing little change. But the real story was in the longer-maturity segments, where rates for Short Notice and Term products climbed to between 10.45 per cent and 11.60 per cent.
This rise signals that banks were demanding higher returns for lending over longer periods, likely due to tighter liquidity and increased caution.
Transaction volumes in March told a similar story. Overnight deals dominated the market, with a whopping Tk47 billion traded, showing strong demand for short-term funding.
In contrast, longer-maturity transactions were much smaller, ranging from T300 million to Tk2.83 billion. This stark difference in volumes highlights the market's preference for short-term liquidity over longer-term commitments, a trend that aligns with the rise in longer-maturity rates.
The number of deals also reflected this shift. Overnight deals were the most active, with 60 transactions recorded. Meanwhile, longer-maturity deals were far fewer, with only 1 to 7 deals taking place.
This low activity in longer-term segments further underscores the cautious approach banks are taking in the current economic climate.
Overall, the interbank call money market in 20 March 2025 showed signs of tightening, particularly in longer-maturity segments. While the overnight rates remained stable, the rise in rates for longer tenors and the drop in transaction volumes for those products point to a more cautious and constrained market.
These trends are likely driven by Bangladesh Bank's ongoing efforts to control inflation and the seasonal adjustments during Ramadan, which may have influenced trading patterns.
The market's behavior suggests that banks are prioritizing short-term liquidity while remaining wary of longer-term risks.
A senior BB official said call money rate remained steady at 10 per cent in February 2025, as banks relied on repo and SLF amid liquidity shifts. Excess liquidity rose to Tk2150 billion in December. Inflation dropped to 9.94 per cent in January, prompting the central bank to phase out 28-day and 14-day repo facilities.
