The Bangladesh Bank (BB) has increased the policy rate by 25 basis points to 6% making money more expensive for banks when they are already in liquidity crisis.

The central bank unveiled its new monetary policy for the second half of the current fiscal year at a press conference held in its headquarters Sunday (15 January). 

The Bangladesh Bank said it would pursue a cautiously accommodative policy stance in the second half of the current fiscal year to contain inflationary and exchange rate pressures.

Reverse repo rate was also increased by 25 basis points to 4.25% in the new policy.

In the new policy, private sector credit growth was kept unchanged to 14.1% while the public credit growth ceiling increased to 37.7% for June from the previous ceiling of 36%.

The central bank termed the country's near-term economic outlook as quite stable, that it said critically depends on three external issues including the length and intensity of the Russia-Ukraine war, the spree of interest hikes by the Fed, and the re-emergence of the Covid-19 situation and its severity in China.

The improvements in these challenges will expedite Bangladesh's future economic gains, noted the Bangladesh Bank.

However, in case of any adverse consequences of the above external issues, the Bangladesh economy has enough resilience to remain insulated in its current condition, it added.