Dhaka, Bangladesh (BBN) - The central bank of Bangladesh has raised the policy rate, also known as the repo rate, by 50 basis points to 10 per cent in an effort to combat the higher inflation.
The new rate will come into effect from October 27, according to a notification, issued by the Bangladesh Bank (BB), the country’s central bank, on Tuesday.
The policy rate hike means banks under liquidity crunch will now have to pay more interest for loans taken from the central bank.
“It would also lead to an increase in interest rates at the customer level. With rising interest rates, spending is expected to decline, which would ultimately reduce inflation,” a senior banker told BBN while explaining the impact of the policy rate hiked.
This is the 11th time since May 2022 the central bank hiked the policy rate to make money expensive for banks and tame demand to curb inflationary pressure on the economy.
The latest hike comes in less than a month after the BB increased the repo rate to 9.50 per cent from the previous 9.0 per cent.
Meanwhile, Bangladesh’s inflation as measured by consumers’ price index eased further to 9.92 per cent in the month of September on the point-to-point basis mainly due to lower prices of both food and non-food items.
The inflation dropped 58 basis points to 9.92 per cent in September this calendar year from 10.49 per cent a month before. It was 9.72 per cent in June, 2024, according to the Bangladesh Bureau of Statistics (BBS)’s latest data.
Food inflation fell 96 basis points to 10.40 per cent in September from 11.36 per cent a month ago while non-food inflation came down to 9.50 per cent from 9.74 per cent on the point-to-point basis.
In August, the country's inflation dropped to 10.49 per cent from record 11.66 per cent in July, marking a 1.17 percentage point decline – the largest decline since 2013.
BBN/SSR/AD