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BB further increases policy rate to 5.75%

Staff Correspondent
29 Sep 2022 18:56:15 | Update: 29 Sep 2022 21:49:04
BB further increases policy rate to 5.75%

The Bangladesh Bank has raised its key interest rate which is known as the policy rate for the third time this year to tackle the inflationary pressure.

The central bank increased the policy rate by 25 basis points to 5.75 per cent, according to a circular issued by the Bangladesh Bank on Thursday.

The BB interest rate, which is termed the repurchase agreement (repo), is a pivotal benchmark interest rate followed by commercial banks to set the interest rates on both loans and deposits.

Increasing the repo rate means the taka will be costlier, which will subsequently help contain inflation.

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Not only had Bangladesh Bank but also many of the central banks around the world increased their policy rates to combat inflation.

Abul Kalam Azad, an assistant spokesperson of Bangladesh Bank, told The Business Post, “It is a kind of adjustment. Now that the inflationary pressure is high, the central bank has increased the rate.”

In July, the inflation was 7.48 per cent and for August the Bangladesh Bureau of Statistics (BBS) has yet to publish the rate.

Earlier on May 29, the Bangladesh Bank increased the rate by 25 basis points from 4.75 per cent to 5 per cent after a decade, since the country suffered from inflationary pressure following the Russia-Ukraine war and due to the increased domestic demand after the ease of the Covid pandemic.

On June 30, the central bank raised the repo rate for the second time this year by 50 basis points from 5 per cent to 5.50 per cent.