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Bangladesh hikes rates 50 bps

Central bank said it was lifting the repo rate to 7.75%,and the reverse repo rate 5.75%.

Written by Agencies | Dhaka | Published: January 6, 2012 1:23:06 pm

Sheikh Hasina-led Bangladesh is taking its fight against inflation quite seriously and is willing to go through some pain to ensure prices fall.

Its central bank raised its key interest rates by half a percentage point with effect from Sunday,its fifth hike since March,as it battles to curb persistently high inflation.

The central bank said it was lifting the repo rate,which it uses to inject money into the banking system,to 7.75 percent,and increasing the reverse repo rate,through which it absorbs excess cash from banks,to 5.75 percent.

Annual inflation slowed to 10.63 percent in December from 11.58 percent in November as doof prices rises slowed,but officials say the headline figure may resume its climb after the government hiked oil and power tariffs to cut its subsidy bill.

Non-food inflation has been accelerating since May after the government raised oil prices for the first time in three years.

It raised oil prices again last week.

Stubborn inflation prompted the central bank to raise its key interest rates by half a percentage point in September,its fourth hike since March,following an earlier reserve increase and a 1 percentage point rise in official rates in August 2010.

However,the latest hike puts it at odds with many other central banks around the world which having been relaxing policy,or are preparing to ease,to support domestic growth amid the faltering global economy.

Food inflation eased to 10.40 percent in December from 12.47 percent in November,but non-food inflation accelerated to 11.38 percent from 10.16 percent,the Bureau of Statistics said on Thursday.

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