Bangladesh Bank raises repo rate to control inflation

Bangladesh Bank has increased the repo rate to 5.75 percent, from 5.5 percent, to control inflation.

The central bank took the decision at the 56th meeting of the Monetary Policy Committee (MPC) held on Thursday, reports UNB.

Amidst rising inflation in the world market, Bangladesh is also witnessing the same.

In order to control inflation, the committee raised the repo rate, which will be effective from October 2 (Sunday).

The reverse repo rate will remain unchanged at the existing 4 percent, said a notification of the central bank.

The repo rate is the key monetary policy rate of interest at which the central bank lends money to banks in the short term, essentially to control credit availability, inflation, and economic growth.

The Bangladesh Bank notification stated that despite the economic recovery after Covid-19 fallout, the imbalance between global demand and supply still exists as supply chain problems caused by the ongoing Russia-Ukraine war have worsened.

As a result, since the beginning of 2021, most commodity prices in the global market have surged.

The world’s top economy, the US, has also increased policy interest rate to control inflation. Global prominent economists have warned that a new recession is coming from the supply chain disruption erupted from the Russia-Ukraine war.