MPD Circular No. 02: Introducing 'Interest Rate Corridor (IRC)'

Monetary Policy Department Bangladesh Bank Chief Department, Dhaka. website: www.bb.org.bd MPD Circular No. 02 dated: 20 June 2023 06 Ashar 1430 To Chief Executive/Chief Executive Officer All Scheduled Banks, Non-Bank Financial Companies and Other Institutions in Bangladesh.

Subject: Introduction of 'Interest Rate Corridor (IRC)'

Dear Sir/Madam,

In the context of the dynamic evolution of the national economy and to facilitate monetary transmission, the Bangladesh Bank has taken a decision to introduce an 'Interest Rate Corridor (IRC)' in its Monetary Policy Statement No. 59 dated 11 June 2023.

2. Through the said 'Interest Rate Corridor', the Overnight Rate has been set at 6.50% (an increase of 50 basis points from 6.00%), the Call Money Rate at 8.50% (a decrease of 50 basis points from 9.00%), and the Non-Deliverable Forward (NDF) Rate at 4.50% (an increase of 25 basis points from 4.25%). Thus, a symmetric Interest Rate Corridor has been established with an upper limit of 200 basis points for the Call Money Rate and a lower limit of 200 basis points for the NDF Rate.

3. The above decision will be effective from 1 July 2023, and all banks and non-bank financial institutions that have previously been directed shall comply with the said date.

Yours faithfully,

(K.M. Abdur Rouf) Deputy Governor Phone: 9530059