In a strategic move to stimulate the interbank call money market, Bangladesh Bank has announced a reduction in the lower limit of its interest rate corridor.

The decision, aimed at discouraging commercial banks from keeping idle funds with the central bank, was detailed in a circular issued by the Monetary Policy Department on February 9, 2026.

According to the circular, the Standing Deposit Facility (SDF) rate which acts as the floor of the corridor has been slashed by 50 basis points, moving from 8 percent to 7.50 percent.

Bangladesh Bank buys another $196.5 million to stabilize forex market

The central bank observed that many commercial banks were opting to park their excess liquidity in the SDF rather than lending to other banks or the private sector. This trend has been hindering the dynamism of the interbank call money market.

By lowering the SDF rate, the central bank is making it less attractive for banks to hold cash at the central bank, effectively nudging them to provide credit elsewhere.

The 113th meeting of the Monetary Policy Committee (MPC) finalized the structure for the interest rate corridor.

The central bank expects this move to streamline liquidity management and ensure a more robust flow of funds within the financial system. These new rates are scheduled to officially come into effect on February 15, 2026.

The circular was signed by Md. Shadrul Hassan, Director of the Monetary Policy Department, and has been dispatched to the Managing Directors and CEOs of all banks and financial institutions.

Bangladesh Bank keeps policy rate at 10% as inflation risks persist