Bangladesh will raise interest rates to 9% in coming days to control inflation, Cbank chief told BBC By Reuters

(Reuters) – Bangladesh’s central bank will raise interest rates to 9 percent from 8.5 percent in the coming days in a bid to control rising inflation, the bank’s governor told the BBC in an interview published early Thursday.

The move comes after weeks of political turmoil in the country fueled a sharp rise in inflation, hitting 11.66 percent in July, amid an ongoing struggle with dwindling reserves and exports from the main garment industry that have been hit.

Bangladesh Bank’s new governor, Ahsan H. Mansur, appointed just a week ago, also said he would raise interest rates to 10 percent or more in the coming months.

Mansur could not immediately be reached for comment.

He previously said that while inflation should fall substantially over the next year, interest rate cuts could take longer.

Mansur was appointed by Bangladesh’s interim government led by Nobel Prize-winning economist Muhammad Yunus, who was sworn in following the ouster of Prime Minister Sheikh Hasina, who fled to India this month after a violent uprising against her.

Mansur also told the BBC that he was in talks with the International Monetary Fund to “increase” the bailout by another $3 billion. The IMF approved a $4.7 billion loan program with the country in January 2023.

He said the country is seeking an additional $1.5 billion from the World Bank and $1 billion each from the Asian Development Bank and the Japan International Cooperation Agency.

In the year to June 30, the World Bank had total commitments of $2.85 billion to Bangladesh, whose $450 billion economy was the fastest growing in the world just a few years ago.