Bangladesh Bank hikes policy rate by 25 basis points

Bangladesh Bank has raised its policy rates by 25 basis points as it unveiled the monetary policy for the second half of the ongoing fiscal year.

As a result, the repo rate, the interest rate at which the central bank loans money to commercial banks, would be 6 per cent from 5.75 per cent in the first half of 2022-23.

The reverse repo rate, the rate at which the central bank borrows money from commercial banks, has been increased to 4.25 per cent from 4 per cent.

A hike in the repo rate is expected to make loans costlier, thus helping the BB step up its fight against inflation, which is running at a multi-year high.  

This was the fourth hike in the repo rate, also known as the policy rate, since May 29.

The move is in line with the efforts of central banks around the globe as they are desperately trying to curb inflationary pressures amid supply chain disruption, driven by the Russia-Ukraine war.