Bangladesh Bank has further increased the policy interest rate to control inflation. The policy rate has been set at 9 percent, an increase of 50 basis points from the existing 8.50 percent.
According to the decision of the monetary policy committee meeting on Sunday (August 25), the policy interest rate has been increased. This decision of Bangladesh Bank will be effective from next Tuesday.
The upper and lower limits of the policy interest corridor have been extended, Bangladesh Bank said. The upper limit of the policy interest rate has been increased by 50 basis points from 10 percent to 10.50 percent for Standing Landing Facility (SLF) and the lower limit for Standing Deposit Facility (SDF) has been increased by 50 basis points from 7 percent to 7.50 percent.
With this, the discussion of reverse repo rate also becomes relevant. For example, if the central bank feels that there is excess liquidity in the market, then the central bank can withdraw that liquidity. These withdrawals carry a fixed rate of interest. The rate at which the central bank pays commercial banks to withdraw money is called reverse repo. Usually the reverse repo rate is lower than the policy rate or the repo rate.
Source -Bangladesh Bank
