Capital can quickly exit the market, putting pressure on Bangladesh’s foreign reserves and currency stability.
In July last year, the central bank withdrew the 9 percent lending rate cap and introduced the Six-months Moving Average Rate of Treasury bills (SMART).
The interest rate on bank loans in Bangladesh has gone past 12 percent as the reference rate has seen an increase, central bank data showed
China cut its one-year benchmark lending rate on Monday as authorities seek to ramp up efforts to stimulate credit demand, but surprised markets by keeping the five-year rate unchanged amid broader concerns about a rapidly weakening currency.
While the government’s latest monetary policy for the first half of fiscal year 2023-24 shows an attempt to be rational for the market, it lacks vigour to solve inflation and the dollar crisis.
The Bangladesh Bank will introduce a market-driven reference lending rate
Bangladesh Bank today relaxed the lending rate cap for consumer loans, allowing banks to hike it up to 3 percentage points from the current level.
The current lending rate, which equals the inflation rate, has brought about major challenges for the economy as a negative interest rate has prompted many large clients to borrow hugely despite subdued demand, giving them the leeway to divert funds to the unproductive sector.
Capital can quickly exit the market, putting pressure on Bangladesh’s foreign reserves and currency stability.
In July last year, the central bank withdrew the 9 percent lending rate cap and introduced the Six-months Moving Average Rate of Treasury bills (SMART).
The interest rate on bank loans in Bangladesh has gone past 12 percent as the reference rate has seen an increase, central bank data showed
China cut its one-year benchmark lending rate on Monday as authorities seek to ramp up efforts to stimulate credit demand, but surprised markets by keeping the five-year rate unchanged amid broader concerns about a rapidly weakening currency.
While the government’s latest monetary policy for the first half of fiscal year 2023-24 shows an attempt to be rational for the market, it lacks vigour to solve inflation and the dollar crisis.
The Bangladesh Bank will introduce a market-driven reference lending rate
Bangladesh Bank today relaxed the lending rate cap for consumer loans, allowing banks to hike it up to 3 percentage points from the current level.
The current lending rate, which equals the inflation rate, has brought about major challenges for the economy as a negative interest rate has prompted many large clients to borrow hugely despite subdued demand, giving them the leeway to divert funds to the unproductive sector.
