Bank rate got another raise by 0.50 percentage point to 6.50 per cent, signalling the authorities" continued efforts to squeeze credit to private sector, reports UNB.

A Bangladesh Bank an nouncement yesterday said the new bank rate, enhanced from earlier rate of 6 per cent, took immediate effect.

This is the third raise in bank rate in few months which, a central bank official said, aimed to make credit costlier and thus ease inflationary pressure.

The Bangladesh Bank yesterday also raised the lowest rates of interest on savings and fixed deposits to 6 per cent and 6.35 per cent from 5.25 per cent and 5.75 per cent respectively.

To Justify the interest hike, the central bank said the increased rates on savings and fixed deposits would encourage depositors to save and keep money in banks. "Bank deposits are expected to have a spurt responding to the measures."

The additional deposits and their investment in productive sectors are also expected to infuse dynamism in the economic activities, it added.

In the wake of expansionary monetary policy, growth in private-sector credit peaked to 22 per cent in the last fiscal year (1994-95), putting pressure on inflation. Swoop on bank credit by the central bank, however, brought the growth down to about 4 per cent during the first four months of the current fiscal year.