Policy rate hiked by 50 basis points to tame inflation
he decision to increase the policy rate, along with corresponding adjustments to the Standing Lending Facility (SLF) and Standing Deposit Facility (SDF) rates, aims to anchor inflation expectations at the desired level.
The Bangladesh Bank hiked the policy rate by 50 basis points to 8.5% today (8 May) in a bid to rein in inflation.
The central bank made the disclosure during a press conference.
The decision to increase the policy rate, along with corresponding adjustments to the Standing Lending Facility (SLF) and Standing Deposit Facility (SDF) rates, aims to anchor inflation expectations at the desired level.
Keep updated, follow The Business Standard's Google news channel
According to the Bangladesh Bureau of Statistics (BBS), the point-to-point inflation in Bangladesh rose slightly to 9.81% in March compared to 9.67% in February.
The overall inflation has been above 9% since March 2023.
In December 2023, preceding the announcement of the monetary policy for the second half of the financial year in January, inflation stood at 9.41%.
The Bangladesh Bank had earlier also raised the policy rate.
In the beginning of October last year, for instance, the Bangladesh Bank increased its key policy rate by 50 basis points to 7.75% -- the largest hike in a decade.
In January this year, the policy rate was again hiked by 25 basis points, reaching 8%.
The hike came less than a week after the formation of the new government. Prime Minister Sheikh Hasina announced her government's main aim was to fight inflation.
Speaking to The Business Standard earlier, Zahid Hussain, former lead economist at World Bank's Dhaka office said, "The central bank's policy rate and lending rate hikes aim primarily to control inflation. However, it will take some time for the impact to be visible on the market."
He also said: "On the other hand, if the policy rate increases, the fund cost of the banks will increase, but the loan cost of the customers will also rise."
