Bangladesh Bank has increased the benchmark interest rate for bank loans by 54 basis points, reaching 8.68 percent in February. This is the largest rise in seven months. With banks allowed to add 3.75 percentage points for consumer loans, the maximum interest rate customers could be charged is now 12.43 percent, up from 11.89 percent the previous month. The increase follows a 25 basis point hike in the repo rate to 6 percent to combat inflation. The SMART (Six-month Moving Average of Rate of Treasury bill) method, introduced in July 2023, determines the rate and aims to modernize monetary policy, curb inflation, and shift to a market-based interest rate system as per IMF conditions. The SMART rate is updated monthly.
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