Dhaka, Oct 22 (V7N) – The Bangladesh Bank has increased the policy rate by 50 basis points, bringing it to 10%, with the change set to take effect on October 27, according to a circular issued today.

This marks the fifth rate hike in 2024, and the tenth since May 2022 when the rate stood at 5%. The central bank had previously raised the rate from 9% to 9.5% on September 24, effective from the next day.

In addition to the policy rate hike, the Standing Lending Facility (SLF) has been increased to 11.5%, and the Standing Deposit Facility (SDF) now stands at 8.5%, both rising by 50 basis points.

The SLF provides overnight credits to eligible banks, while the SDF allows banks to deposit their excess liquidity. These measures come amid ongoing efforts to stabilize the currency market and improve financial management.

Moreover, the central bank has announced that banks will now only be able to borrow via repurchase agreements (repo) from the central bank on Tuesdays, shifting from the previous practice of allowing repo borrowing on Mondays and Wednesdays after halting daily repo lending on July 1.

Repo lending enables banks to borrow short-term funds from the central bank, with these open-market operations serving to regulate the money supply and credit conditions.

Bangladesh Bank Governor Ahsan H Mansur had previously indicated in September that the policy rate would be increased multiple times to control inflation, and the latest rate hike aligns with that projection.

END/MSS/RH