BB raises policy interest rate to 7.25pc to tame inflation

The Bangladesh Bank has decided to raise the policy interest rate by 0.75 percentage point from 6.5 per cent to 7.25 per cent, in an effort to tame rising inflation.

The decision came at a high-level meeting at the central bank on Wednesday, said its spokesperson Mejbaul Haque, adding it aims to bring inflation down to 8 per cent by December.

In the aftermath, the interest rates for both bank deposits and loans will rise, while the commercial banks will see a higher interest rate in borrowing money from the central bank.

The high interest rates allure the people to deposit money in the banks and eventually help stabilise the economy and mitigate inflationary pressure.

According to the Bangladesh Bureau of Statistics (BBS), the headline inflation has slightly dropped in September to 9.63 per cent from 9.92 per cent recorded in August.

Still, food inflation remains a concern, with a figure above 12 per cent in August and September both in rural and urban areas. The figure was 12.54 per cent in August.

The overall inflation in rural areas saw a marginal decline to 9.75 per cent in September from 9.98 percent in August, while it decreased to 9.24 per cent in urban areas in September, from 9.63 per cent recorded in August.