Bangladesh Bank rolls out daily interest rate benchmarks to match global standards

Two new benchmarks will guide lending rates in the domestic financial market

Bangladesh Bank has introduced its first-ever transaction-based reference rates to provide a clear indicator of prevailing interest rates across the financial sector.

The central bank released the inaugural figures on Wednesday, with the one-day Bangladesh Overnight Financing Rate (BOFR) fixed at 10.42 percent and the Dhaka Overnight Money Market Rate (DOMMR) at 10.09 percent.

The move marks the beginning of a daily publication schedule intended to inform the market about interest rate trends from the previous day's transactions.

The BOFR was calculated based on 32 interbank repo transactions worth Tk 34.23 billion from the previous day, while the DOMMR was derived from 45 unsecured money market deals involving Tk 22.36 billion.

The BOFR one-week rate came in at 10.62 percent, reflecting earlier trading activity.

For DOMMR, the one-week rate is 10.14 percent after analysis of 42 transactions worth Tk 26.38 billion.

The one-month DOMMR comes in at 10.78 percent from five transactions totalling Tk 2.5 billion.

The three-month rate is 10.42 percent following seven transactions involving Tk 1.80 billion.

At a press briefing on Monday, the central bank said the reference rates will act as a price indicator for bonds, floating-rate products and different financial contracts, helping guide interest rate formation in the financial market.

Globally, market-based lending rates are commonly benchmarked against SOFR or similar reference systems.

Bangladesh Bank will now publish BOFR and DOMMR daily as domestic reference rates.

With this rollout, it joins countries that maintain structured reference rate systems for financial markets.

BOFR is considered a risk-free benchmark, derived from secured interbank repo transactions backed by full collateral. DOMMR, in contrast, reflects unsecured interbank lending based on transactions without collateral.

Banks will be able to set lending rates by adding to or subtracting from these reference rates.

The central bank, however, has warned it will intervene if rates are set at abnormal levels or if there is any attempt to manipulate market-based pricing.

Initially, only the one-day rate has been introduced, with one-week, one-month and three-month DOMMR rates to follow in phases.

Bangladesh Bank said the daily publication will improve transparency in the financial system and provide foreign investors with a clearer understanding of interest rate trends and market conditions.

The framework was developed after pilot testing and consultations with banks since January, before being formally launched.