Dhaka, Bangladesh (BBN) - The Bangladesh Bank (BB) has raised the policy rate, also known as the repo rate, by 50 basis points to 9 percent in an effort to combat the skyrocketing inflation.
This decision to hike the policy rate was made during a meeting of the central bank’s monetary policy committee.
The policy rate was increased for second increase in just over three-month period.
Earlier on May 8, the policy rate was raised by 50 basis points to 8.5 percent, following recommendations from the International Monetary Fund (IMF).
At that time, inflation had remained above 9 percent since March of the previous year, signaling no signs of easing.
The latest data from the Bangladesh Bureau of Statistics (BBS) indicates that the 12-month average inflation reached 9.73 percent in the 2023-24 fiscal year, with consumer prices soaring to 11.66 percent in July— the highest rate since at least the 2010-11 fiscal year.
This spike in inflation reflects the deteriorating purchasing power of consumers.
The government had aimed to keep inflation within 7.5 percent for the last fiscal year, but this target was missed for the fifth consecutive year. To curb inflation, the BB has been pursuing a contractionary monetary policy, raising the policy rate multiple times since May 2022.
This approach has led to an overall increase in interest rates, making borrowing more expensive.
BBN/AN/AD