In addition to the policy rate, the central bank increased the standing lending facility rate by 50 bps to 10.5 per cent, and the standing deposit facility rate by 50 bps to 7.5 per cent, domestic media outlets reported.

The new rates take effect from today, the Bangladesh Bank informed banks and non-banking financial institutions.

Central bank governor Ahsan H Mansur had recently announced that the policy, or repo, rate would first rise to 9 per cent and then potentially to 10 per cent in phases.

He said while businesses emphasise reducing inflation, the central bank's current monetary policy is effective, but will be slightly tightened. Inflation is expected to improve to 5-6 per cent within seven to eight months, he had said.

Interest rates will continue to rise until inflation starts to fall, and the stable currency exchange rate should also aid in reducing inflation, he had emphasised.

General inflation last month rose to a record high of 11.66 per cent, according to the Bangladesh Bureau of Statistics. It was 9.72 per cent in June.

Fibre2Fashion News Desk (DS)