The interbank call money rate has remained steady at 10 per cent since November 2024, as banks have been reluctant to borrow at high rates amid the current business climate.
In addition, the demand for loans has declined due to political unrest, leading to an increase in excess liquidity.
According to Bangladesh Bank data, the call money rate was 10.04 percent on Monday and has remained around this level since November 14, 2024, when it first hit 10.03 per cent 鈥� the highest in 11 years.
The last time the rate was higher was in January 2013, when it reached 10.29 percent.
Excess liquidity in banks rose to Tk 2,15,002 crore in December, up from Tk 2,07,623 crore in November and Tk 1,98,544 crore in October.
Banks often turn to the call money market to address asset-liability mismatches, meet statutory cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements and manage unexpected fund shortages.
The central bank raised the policy rate by 50 basis points to 10 percent on October 22, 2024 with the increase taking effect on October 27, 2024.
This move was part of ongoing efforts to tighten the money supply and control inflation.
The Bangladesh Bank has been steadily raising the policy rate since May 2022, when it stood at 5 percent. It marked the fifth hike within the current year.
Following these increases, the call money rate stabilised at 10 per cent.
The rise in policy rates has pushed lending rates to 14-15 per cent in many banks.
As borrowing costs have climbed, businesses have grown concerned about rising expenses, which could impact production and profitability.
The call money rate reflects the interest rate on short-term or overnight loans between banks, typically used to address urgent funding needs.
The weighted average call money rate has been rising steadily since June of the previous year, when it was at 6 percent.
Inflation in Bangladesh slowed to 9.94 percent in January 2025, down from 11.38 percent in November 2024.
However, it has remained above 9 percent since March 2023 due to rising prices of essential goods.
Bankers noted that the government鈥檚 reduced borrowing from the banking sector and falling treasury bill rates discouraged banks from borrowing on the call money market.
