By Ruma Paul
DHAKA (Reuters) – Bangladesh’s central bank will raise its key interest rate by 0.5% to combat high inflation. This is the fourth hike this year.
The move is in response to increasing inflation, worsened by political unrest and issues in the garment industry.
Starting October 27, the repo rate will increase to 10%. The upper limit for borrowing will rise to 11.5%, and the deposit facility will go up to 8.5%.
Governor Ahsan H. Mansur thinks inflation may drop next year, but lowering interest rates will take longer.
Mansur was appointed by an interim government led by Nobel laureate Muhammad Yunus after PM Sheikh Hasina’s departure amid unrest.
Despite a slight drop in inflation in September, food prices remain over 12%, impacting the 170 million residents heavily.
The interim government is seeking $5 billion in aid from international lenders to stabilize foreign reserves and revive the economy, which has struggled since the Ukraine war raised import costs.
Bangladesh is also seeking a $4.7 billion bailout from the IMF to help with its financial troubles.
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