Bangladesh Bank raises key policy rate by 50 basis points to tame inflation

 
Bangladesh Bank has raised the key policy rate, known as the repo rate, by 50 basis points to mitigate high inflationary pressures. The banks were notified about the decision by a letter on Tuesday, according to the central bank spokesperson Husne Ara Shikha.

The interest rate has been made 9.50 percent from 9 percent. It will take effect from Wednesday, she told bdnews24.com.

Due to the hike, the interest rate on the money that a liquidity crisis-hit commercial bank will borrow from Bangladesh Bank will increase.

That means the central bank has intensified pressure on the contractionary monetary policy, trying to decline the supply of money to control inflation.
The policy rate was previously raised by 50 basis points to 9 percent in August.

Bangladesh Bank Governor Ahsan H Mansur said at a media briefing on Monday, "The inflation is expected to be in a good place by March-April. It's difficult to say how good it will be. But we will tighten the policy so that inflation comes down.

"Remittances are also increasing. The exchange rate is stable now and we hope it will remain so. If this can be maintained, inflation will surely drop."
The policy interest rate was increased for the second time after economist Mansur was made the governor of the central bank after Muhammad Yunus-led interim government came to power on Aug 8.