The central bank has announced a new monetary policy by increasing the policy interest rate for the second half (January-June) of the financial year 2023-24. In monetary policy, the policy rate has been increased by 25 percent points to 8 percent. The policy interest rate has been raised primarily to bring down the inflation rate to 6 percent.
Bangladesh Bank Chief Economist Habibur Rahman announced the monetary policy for the January-June period at the conference room of Bangladesh Bank on Wednesday afternoon. After that, Governor Abdur Rauf Talukder answered various questions from journalists.
As a result of this change, the one-day repurchase agreement interest rate has increased by 25 basis points to 8 percent from 7.75 percent.
Earlier, last November, Bangladesh Bank increased the policy rate by 50 basis points to 7.75 percent.
Abdur Rauf Talukder said, "It takes some time to control inflation by increasing interest rates. Although not higher than before, inflation has been decreasing continuously since last November".
A commercial bank`s interest rate is set through a repo when it borrows money from the central bank to meet its liquidity needs. Additionally, banks deposit their excess funds with the central bank via reverse repo. The phrase "bank rate" refers to the interest rate at which the central bank grants long-term loans to commercial banks.
According to the central bank, the priority in monetary policy is to mitigate demand-side inflationary pressure, control exchange rate pressure, ensure the supply of money necessary for the government`s desired economic growth, and ensure the supply of credit to job-creating sectors.
To manage the finances of a country, monetary policy is essential. This presents a plan detailing the amount that domestic debt, the money supply, domestic wealth, and foreign wealth will rise or decrease.
