2024-09-24 14:50:28
Bangladesh Bank has announced to increase the policy interest rate. The Central Bank has taken this decision to control high inflation in the country.
Bangladesh Bank informed this in a circular on Tuesday (September 24).
Officials of the central bank said that when the banks borrow from the central bank, the interest rate is fixed through repo. And through reverse repo banks deposit their surplus money in Bangladesh Bank.
The interest rate at which the central bank offers long-term loans to commercial banks is called bank rate. Increasing the repo rate will increase the cost of borrowing money from the central bank. As a result of this new decision, the interest rate of the money that the banks will borrow from Bangladesh Bank will increase. Besides, the interest rate of deposits kept in banks and bank loans will also increase.
According to Bangladesh Bank’s circular, the policy interest rate or repo rate has been revised from 9 percent to 9.50 percent by increasing 50 percent points. As a result, the interest rate of the money that the banks will borrow from the central bank will increase. That is, Bangladesh Bank is on the path of more contractionary money supply.
As per the new decision, the cap on the standing lending facility (SLF) interest rate corridor has been revised by 50 basis points from 10.50 percent to 11 percent. Besides, the lower limit of the standing deposit facility (SDF) interest rate of the policy interest corridor has been increased from 7.5 percent to 8 basis points.
The decision to increase the policy interest rate will be effective from Wednesday (September 25). The Central Bank has taken this decision in the 5th meeting of the Monetary Policy Committee to control inflation.
Meanwhile, on Monday, the governor of Bangladesh Bank. Ahsan H. Mansoor said that Bangladesh Bank has decided to increase the policy rate or policy interest rate again to control the rising food prices and inflation. This interest rate will be increased this week. It will gradually increase in the coming months.