Bangladesh Bank today hiked the policy or repo rate, at which commercial banks borrow from the central bank, by 50 basis points to 9.50 percent to rein in inflation.

According to a circular issued today, the new rate will come into effect from September 25.

An increase in the policy rate is expected to make bank borrowing costlier, enabling people to cut expenditures and curtail demand, subsequently bringing down inflation.

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Interest rates to be hiked by 50 basis points to 9%