The Bangladesh Bank (BB) has raised the policy rate by 50 basis points to 9.50% to combat rising inflation, effective immediately. This marks the ninth increase since May 2022, when the rate was just 5%. The central bank also adjusted the standing lending facility (SLF) to 11% and the standing deposit facility (SDF) to 8%, affecting banks’ borrowing and lending costs.
Business leaders expressed concerns that higher borrowing costs could lead to increased production expenses, reduced competitiveness, and fewer job opportunities. The BB’s decision follows a Monetary Policy Committee meeting that prioritized inflation control. While the BB is optimistic about bringing inflation down, experts question whether tightening monetary policy alone can effectively reduce inflation from over 10% to 6-7%.
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