BB raises key policy rate again to curb inflation

Staff Reporter :
Bangladesh Bank (BB) yesterday raised its key policy rate by 50 basis points to 7.75 per cent in an effort to curb inflation.

The central bank’s move will also make money costlier for commercial banks.

In October, BB increased the rate by 75 basis points to 7.25 per cent. Policy rate, which is also known as repo rate, is the interest rate at which the central bank of a country lends money to commercial banks.

In addition to the policy rate, the Bangladesh Bank also raised the SMART (Six Months Moving Average Rate of Treasury Bill) rate by 25 basis points to 3.75 per cent.

After incorporating the SMART rate into the treasury bill rate of 7.43 per cent, the lending rate will surge to 11.18 per cent.

These decisions were made at the first meeting of the newly formed Monetary Policy Committee on 22 November.

The new rate will be effective from Monday, according to a BB release issued on Monday.

The committee set a target to reduce inflation to 8 per cent in December and 6 per cent by June next year.