Bangladesh Bank Raises Interest Rates

Bangladesh Bank has decided to increase the interest rate by 25 basis points to control inflation. According to the new amendment, the central bank has fixed the repo interest rate at five percent. In other words, in order to take a loan from the central bank, other banks have to pay interest at this rate.

The decision was taken at a meeting of the Monetary Policy Committee of Bangladesh Bank formed on Sunday (May 29) to formulate and implement the country's monetary policy.

After about two years, Bangladesh Bank revised this rate. In July 2020, the central bank cut the policy rate from 5.25 percent to 50 basis points to 4.75 percent.

Experts say the central bank's decision could help curb inflation as well as reduce bank borrowing.

The reverse repo rate, however, has been kept unchanged at four percent. In other words, money will be taken from the banks at this rate if the central bank needs it.

According to a press release signed by Abul Kalam Azad, Director and Assistant Spokesperson of Bangladesh Bank The decision was made after reviewing the upward trend in commodity (food and non-food) prices and key indicators of the domestic economy and the global economy.

The last time the central bank raised its policy rate was on January 5, 2012. That year, the policy rate was increased by 50 basis points to 7.75 percent.