The Bangladesh Bank has lowered the Standing Deposit Facility (SDF) rate—commonly known as the reverse repo rate—by 50 basis points to 8.0 percent, effective from July 16, to enhance liquidity circulation and energize the interbank call money market.

The decision was taken during a meeting of the central bank’s Monetary Policy Committee and announced through an official notice on Tuesday. The SDF rate serves as the lower bound of the central bank’s policy interest rate corridor under its current monetary framework.

“By reducing the SDF rate, the central bank aims to discourage commercial banks from parking excess funds at the central bank and instead encourage them to lend more in the call money market,” said a Bangladesh Bank official.

This adjustment is designed to streamline liquidity management and enhance the vibrancy of the money market. The notice stated that the move is expected to improve short-term funding availability among banks and reduce their dependence on the central bank for overnight placements.

However, the main policy rate—also known as the overnight repo rate—has been kept unchanged.

The rate cut comes amid the central bank’s broader efforts to manage market liquidity through a mix of policy tools. Just this week, Bangladesh Bank intervened in the foreign exchange market by purchasing $313 million from 22 commercial banks, aiming to stabilise the value of the taka against the US dollar.