Govt plans to hike interest rate to control inflation

Bangladesh Bank will raise the repo rate by 50 basis points to step up its fight against the persisting higher inflation.

The central bank has decided to increase all types of interest rates, including policy interest, to bring down inflation to 8 percent by next December. The new policy interest will be effective from Monday (November 27).

The decision was taken in the first meeting of monetary policy committee (MPC) on Sunday (November 26), said Bangladesh Bank.

After raising the repo rate, the central bank's other policy rates will be increased also.

According to the decision, the cap on the standing lending facility (SLF) interest rate in the policy interest corridor has been revised up by 50 basis points from 9.25 per cent to 9.75 per cent. Besides, the lower limit of the standing deposit facility (SDF) interest rate of the policy interest corridor has been increased by 50 basis points from 5.25 percent to 5.75 percent.

The repo rate is the rate at which the Bangladesh Bank lends money to commercial banks and financial institutions. Bangladesh Bank informs this rate at the beginning of every month.