Bangladesh Bank increases Cash Reserve Ratio for commercial banks
Monday, 23 June 2014
The Bangladesh Bank (BB) has increased the Cash Reserve Ratio (CRR) for commercial banks to 6.5 per cent, a move that analysts say is aimed at containing inflation.
According to a BB circular issued Monday, the decision would take effect from Tuesday (Jun 24), according to a news agency.
The CRR is the minimum amount of the total customer deposits that commercial banks have to keep as reserves either in cash or as deposits with the central bank.
Former central bank chief Salehuddin Ahmed said that the move intended to curb inflation.
“The liquidity is very high now. Maybe, that’s why the Bangladesh Bank has raised the CRR, which will check the money supply in the market and, hence, will help contain inflation.
According to BB’s latest data, the current amount of excess liquidity stands at Tk 1.35 trillion.
The point-to-point inflation rate in April stood at 7.46 per cent and average inflation at 7.47 per cent.
The current budget intends to keep average inflation within 7 per cent, while the proposed budget for the next fiscal aims to keep it under 7 per cent.