Bangladesh to raise interest rates in a day or two, says Governor Mansur

In an interview with the BBC, Mansur says he will raise rates further to 10 percent or more in the coming months to tame inflation

The Bangladesh Bank is set to announce a decision to raise interest rates from 8.5 percent to 9 percent in a day or two, Governor Ahsan H Mansur told the BBC.

In an interview with the British public service broadcaster at the central bank’s offices in Dhaka on Wednesday, Mansur said he would raise rates further to 10 percent or more in the coming months to tame inflation.

The country’s average inflation rose to 11.66 percent in July, the first month of the fiscal year 2024-25. A month ago, the inflation rate had come down to single digits in June.

AH Mahmood Ali, former finance minister of the Sheikh Hasina government ousted by a mass movement, had aspirations for a sizable improvement in the new fiscal year despite the high inflation rates over the past two years.

He also set an ambitious target for the current fiscal year. In the budget speech, he spoke about the goal of keeping the country's average inflation rate at 6.5 percent in the budget for the 2024-25 fiscal year.

However, the ambitious target was thwarted when the student movement demanding reforms to the quota system for government jobs started at the beginning of the current fiscal year.

The International Monetary Fund, or IMF, had asked Bangladesh to tighten its monetary policy and keep exchange rates flexible while extending a $4.7 billion bailout for Bangladesh.

Mansur told the BBC that he was in conversation with the body to "augment" and "front load" this amount by an additional $3 billion.

Bangladesh was also seeking an additional $1.5 billion from the World Bank and $1 billion each from the Asian Development Bank and the Japan International Cooperation Agency, he said.