Bangladesh Bank has taken decisive steps to tame the inflation. Just a day after increasing the policy rate, the central bank has now raised the lending rate to 10.70%.

This move comes as a response to the surging inflation levels in the country.

The central bank issued a notice to this effect, allowing banks to add a 3.50% margin to the reference rate, known as SMART, which currently stands at 7.20%.

The lending rate will now be 10.70%, up from the previous 3% margin.

The SMART rate, a key benchmark for interest rates, remained at 7.20% in September, and this rate will apply throughout October.

This change is part of a broader shift in Bangladesh’s monetary policy.

In June, the central bank removed the cap on lending rates and introduced a new interest rate system. This shift was made to meet the conditions set by the International Monetary Fund (IMF) for a $4.5 billion loan. However, despite these efforts, inflation has shown no signs of declining significantly.

In September, the average inflation rate surged to 9.63%, significantly surpassing the government’s target of 6 percent for the current fiscal year.

This alarming rise in inflation prompted the Bangladesh Bank to take further action.

Just yesterday, the central bank increased the policy rate by 75 basis points, pushing it to 7.25%.

This move aims to intensify the fight against inflation and maintain economic stability.