Bangladesh raises key policy rate by 50 basis points to 7.75% to tame inflation

Bangladesh Bank has raised the key policy rate, known as repo rate, by 50 basis points to 7.75pc, to make borrowing for banks costlier in a bid to bring down high inflation.

The central bank also targeted to contain inflation within 8 percent by December and 6 percent by June next year in a meeting on Sunday.

It hopes that the downward trend of prices in the global market and availability of winter vegetables will also help control inflation.

The central bank raised the repo rate for the last time by 75 basis points, the highest single jump in 12 years, to 7.25 percent on Sept 29.

The latest is the third hike in around five months, as the Bangladesh Bank has maintained contractionary monetary policy since June amid inflation rising at a near double-digit rate.

Besides banks, their clients will also need to pay more for loans as the central bank has raised the ceiling of interest.

For interest, the banks can now add up to 3.75 percentage points to the reference rate, which is Six months Moving Rate of Treasury Bill or SMART, in place of 3.5 percentage points.