Bangladesh’s central bank raised the benchmark rate by 25 basis points to contain inflation that’s hovering near the highest level in a decade.
The benchmark repurchase rate was increased to 6 per cent from 5.75 per cent effective from Monday, Bangladesh Bank said in a statement on Sunday. The reverse repo rate will climb to 4.25 per cent, it said.
The central bank said it will pursue a “cautiously accommodative” policy stance to contain inflationary and exchange rate pressures. The policy stance will support “desired economic growth, ensuring the necessary flow of funds to the economy’s productive and employment generation activities”, it said in the statement.
The South Asian nation delivered its fourth straight interest rate increase as inflation remains elevated, after coming off a decade high of 9.5 per cent in September. Price gains have stayed above the bank’s 5.6 per cent target for the current fiscal year, while dwindling foreign currency reserves remain a concern for Prime Minister Sheikh Hasina ahead of elections due by January 2024.
As commodity prices soared last year, Bangladesh faced an energy crisis that threatened the nation’s robust garments industry. Still, such exports from the $416 billion economy remained resilient although rising costs of imports have widened the trade deficit.
Amid deteriorating foreign exchange reserves, Bangladesh sought funds from the International Monetary Fund and an initial pact for $4.5 billion in loans was reached in November.