Dhaka, July 31 (V7N)- Bangladesh Bank has taken an initiative to reduce bank loan interest rates with the aim of increasing investment and employment generation. As part of this move, the central bank has reduced the policy interest rate, also known as the repo rate, by 50 basis points from 10 percent to 9.50 percent.
The decision was taken at a meeting of the Monetary Policy Committee of Bangladesh Bank on Thursday (July 30). The new policy rate will come into effect from next Sunday.
With this reduction, commercial banks will be able to borrow funds from Bangladesh Bank at a lower cost than before. Stakeholders expect that the move may eventually lead to a reduction in loan interest rates for customers.
This is the first reduction in the policy interest rate in 21 months. Bangladesh Bank said the decision was made after reviewing the country's overall economic situation, including domestic and global inflation, investment, economic growth and foreign exchange reserves.
The central bank expects the lower policy rate to encourage investment, create new employment opportunities and support economic growth.
Earlier, Bangladesh Bank began increasing the policy interest rate from 2022 as part of measures to control rising inflation. Under a contractionary monetary policy, efforts were also taken to limit private sector credit growth. The policy rate was gradually increased from 5 percent to 10 percent by August 2024 and remained unchanged until Thursday's decision.
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