Bangladesh Battles Inflation with Interest Rate Hike

Bangladesh’s central bank has announced its fourth interest rate increase of the year in response to persistent inflation. The action is amidst political unrest and economic challenges. The move sees the repo rate rise to 10%, with hopes of price stabilization despite ongoing financial pressures and high food inflation.

Bangladesh's central bank announced on Tuesday a half percentage point hike in its key interest rate, the fourth such increase this year aimed at combating stubborn inflation.

The decision arises amid persistent inflationary challenges, exacerbated by political unrest and difficulties in the vital garments sector. The repo rate will increase by 50 basis points to 10% effective October 27, affecting the country's banking system liquidity.

Governor Ahsan H. Mansur, appointed by the interim government, noted while inflation might decrease soon, lower interest rates may not follow quickly. Despite a slight reduction in overall inflation in September, food prices remain alarmingly high.

(With inputs from agencies.)