Nk Barta Online Desk

Bangladesh Bank has hinted to increase the policy rate again to counter the high inflation. On Tuesday (October 22), the Central Bank has issued a notification resetting the policy interest rate by 50 basis points from the existing 9.50 percent to 10 percent. Which will be effective from the beginning of next week.

The policy rate hike was in line with International Monetary Fund (IMF) advice as the country's inflation has been above 9 percent since March last year. On September 24, the central bank raised the policy interest rate by 50 basis points from 9 percent to 9.5 percent. Dr. It was extended for the third time after Ahsan H. Mansoor took charge as the Governor of Bangladesh Bank. Earlier, it was first increased from 8 and a half percent to 9 percent.

In the new guidelines, the central bank said, in view of the decision to continue the contractionary measures followed by Bangladesh Bank, the overnight repo policy interest rate has been re-fixed by increasing 50 basis points from the existing 9.50 percent to 10 percent.

Apart from this, in order to manage the liquidity management of banks more efficiently, the upper limit of the policy interest corridor has been increased by 50 basis points to 11.50 percent from the existing 11 percent interest rate in the case of Standing Lending Facility (SLF). And the lower limit of the standing deposit facility (SDF) under the policy interest corridor has been revised up to 8.50 per cent by 50 basis points from 8 per cent. The new decision will be effective from Wednesday (October 27).

According to BBS data, consumer price inflation rose to 11.66 percent in July this year after the 12-month average inflation stood at 9.73 percent in the fiscal year 2023-24. Which is the highest since 2010-11 financial year. The previous government had set an inflation target of 7.5 percent in the last financial year. Although inflation was much higher than the target in the country.

On the other hand, Bangladesh Bank has been following contractionary policy several times since May 2022 to keep prices under control. Policy rates are increasing. Bank loan interest increased due to increase in policy interest rate. This makes borrowing more expensive than ever.