By Ruma Paul
DHAKA (Reuters) – Bangladesh’s central bank will increase its main interest rate by 0.5% to combat high inflation, marking its fourth hike this year.
This rise is in response to persistent inflation, worsened by political unrest and issues in the garment industry.
Starting October 27, the repo rate will increase to 10%. The Standing Lending Facility will rise to 11.5%, and the Standing Deposit Facility will go up to 8.5%.
Governor Ahsan H. Mansur, appointed in August, forecasts a significant drop in inflation over the next year, but lowering interest rates may take more time.
Mansur was appointed by the interim government led by Nobel laureate Muhammad Yunus after the ousting of Prime Minister Sheikh Hasina on August 5.
Despite a slight decline in general inflation in September, food inflation remains high, over 12%, affecting the 170 million people in Bangladesh.
The interim government is seeking $5 billion from international lenders to stabilize its foreign exchange reserves and revive the economy, which was once among the fastest-growing in the world.
Bengladesh is struggling with high costs for fuel and goods since the 2022 war in Ukraine, leading to a $4.7 billion bailout request from the International Monetary Fund.
`
