The monetary policy committee of Bangladesh’s central bank yesterday raised the policy rate by 50 basis points (bps) to 8.5 per cent to rein in inflation, which is above 9 per cent now.

The standing lending facility (SLF) rate was raised by 50 bps to 10 per cent for better liquidity management and the standing deposit facility (SDF) rate was increased by 50 bps to 7 per cent, a central bank release said.

The decision is being implemented with immediate effect.

The Bangladesh Bank has raised the policy rate several times since May 2022.

The decision followed the conclusion of a 15-day visit to Bangladesh by an International Monetary Fund team led by Chris Papageorgiou. The team discussed economic and financial policies.

"Following the liberalisation of retail interest rates, additional tightening of monetary policy should help alleviate any inflationary pressures resulting from the exchange rate reform. Fiscal policy should support these monetary tightening efforts through revenue-based consolidation. If external and inflationary pressures intensify, the authorities should stand ready to tighten policies further," Papageorgiou said in a statement.

Fibre2Fashion News Desk (DS)

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