Dhaka, Bangladesh (BBN)– The central bank of Bangladesh on Thursday increased its policy interest rates by fifty basis points after nearly eight months to curb inflationary pressures on economy.
“We’ve increased the policy interest rates aiming to curb the inflationary pressure on the economy,” General Manager of the Monetary Policy Department of Bangladesh Bank (BB) Begum Sultana Razia told BBN in Dhaka. 
She also said the BB has used its monetary instruments including cash reserve requirement (CRR) to manage the country’s overall macro-economy properly. 
The interest rate on repurchase agreement (repo) was re-fixed at 6.0 per cent on Thursday from 5.50 per cent while the reverse repo rate was increased to 4.0 per cent from 3.50 per cent. 
The new policy interest rates came into effect from Sunday, a central bank announcement said. 
On 19 August 2010, the central bank raised interest rate on repo to 5.50 per cent from 4.50 per cent while reserve repo interest was re-fixed to 3.50 per cent from 2.50 per cent.
The central bank expects that the inflationary pressures might ease in the coming months following the latest policy intervention, another BB official said. 
The BB’s latest move came against the backdrop of increasing trend of inflation in the recent months because of the increase in prices of food items.
The inflation rate as measured by the consumer price index (CPI) moved up to 8.14 percent in January from 8.13 percent in the previous month on the annual average basis, according to the Bangladesh Bureau of Statistics (BBS) data. 
On the other hand, the point-to-point inflation rate rose to 9.04 per cent in January 2011 from 8.28 per cent in December 2010.
BBN/SI/AD-10Mar11-8:16 pm (BST)