Bangladesh Bank hikes policy rate by 50 basis points to 8.5%
Bangladesh Bank today raised the policy rate by 50 basis points to 8.5 percent to bring down the runaway inflation.
The new rate comes into effect from tomorrow, said the central bank in a notice.
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Since inflation has stayed above 9 percent, the BB has been following a contractionary policy stance in its efforts to reduce demand and contain prices. It has raised the policy rate for several times since May 2022 to increase the cost of money.
Additionally, to refine liquidity management, the Standing Lending Facility (SLF) rate has been increased by 50 basis points to 10 percent.The Standing Deposit Facility (SDF) rate has been increased by 50 basis points as well to 7 percent, the notice said.
The monetary policy committee of the central bank took the decision at a meeting today.
The BB move comes as an IMF mission team led by Chris Papageorgiou concluded its 15-day visit to Bangladesh today. During the visit, it discussed economic and financial policies in the context of the second review of the programme.
"Following the liberalisation of retail interest rates, additional tightening of monetary policy should help alleviate any inflationary pressures resulting from the exchange rate reform. Fiscal policy should support these monetary tightening efforts through revenue-based consolidation. If external and inflationary pressures intensify, the authorities should stand ready to tighten policies further," said Papageorgiou in a statement.
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