The Bangladesh Bank (BB) will follow contractionary monetary policy in July-December of 2023-24 fiscal year.

The banking regulator today said it would follow a contractionary monetary policy in the first half of the upcoming fiscal year in efforts to contain inflation by reducing demand in the economy.

"Conforming to the tight monetary policy, the BB has decided to increase the policy rate," it said in its monetary policy for 2023-24.

The central bank hiked the policy rate, or repo rate, by 50 basis points to 6.5 per cent from July this year from the present 6 per cent.

The move comes as inflation remains stubbornly high. It stood at 9.94 per cent in May, raising calls from a number of economists to cool the demand.