The Bangladesh Bank on Sunday increased its policy rate by 25 basis points to 5% to keep the country's inflation in check.
The rise in policy rate, which is also known as repurchase agreement (repo), is likely to make credit costly as banks will have to borrow from the central bank at the new rate.
The decision to increase the repo rate was taken at the 54th meeting of the monetary policy committee, the Bangladesh Bank said in a press statement.
The press statement, however, did not mention any change to the current 4% reverse repo rate.
The Bangladesh Bank said the global economy has turned around thanks to mass Covid-19 vaccination program and expansionary fiscal and monetary policies adopted by governments and central banks of different countries.
At the same time, the central bank said, rising global demand, disruptions in the international supply chain, protracted Russia-Ukraine war and new uncertainties in the global economy have led to rising prices of all commodities in the global market.
Considering the overall macroeconomic situation, the bank said it decided to up the repo rate from the existing 4.75% to 5% with immediate effect.
The inflation rate rose to 6.29% in April — highest in 18 months, as per the Bangladesh Bureau of Statistics (BBS).
In March, the overall inflation was 6.22%.
