• Interest Rate, Inflation, Earnings and the Market.
Impact of interest rate on Market
Interest rate is one of the most prominent macroeconomic factors among many other macroeconomic factors. It has direct impact not only on our market but also on other macro economic factors like inflation, money supply and investment. Government uses this powerful tool to control money supply, inflation, recession, employment and also investment pattern. Over all, we can say that through interest rate government controls the economic phases of a country.
Now in question of impact on market; interest rate directly affects the stock market, bond market and commercial Bank. Interest rate spread has direct impact on commercial bank and over all investment because people usually borrow from commercial bank and slight change in interest rate has much higher effect highly on commercial bank and also investment pattern of country.
Impact on Commercial Bank
Actually interest rate spread (IRS) effect on commercial bank. Because bank’s overall profit and people borrowing trend or we can say investment trend depend on lending rate and bank’s expense depends on borrowing rate.
At first l will like to discuss about the interest rate regulation and mainly about the interest rate reform policy of Bangladesh. After this policy has been taken interest rate movement has become transparent and logical.
Interest Rate Reforms
Bangladesh began to implement financial sector reform measures in the 1980s and the interest rates were partially deregulated in November 1989 to introduce flexibility in determining deposit and lending rates. As a part of the process, Bangladesh Bank started to set the ceilings and the floors and individual banks were allowed to set their interest rates within the stipulated band. In April 1992 the interest rate bands for lending were removed for all sectors except agriculture, small industries, and exports while, for deposits, the ceilings were removed but the floors were retained. In this context, it is important to
Interest rate is one of the most prominent macroeconomic factors among many other macroeconomic factors. It has direct impact not only on our market but also on other macro economic factors like inflation, money supply and investment. Government uses this powerful tool to control money supply, inflation, recession, employment and also investment pattern. Over all, we can say that through interest rate government controls the economic phases of a country.
Now in question of impact on market; interest rate directly affects the stock market, bond market and commercial Bank. Interest rate spread has direct impact on commercial bank and over all investment because people usually borrow from commercial bank and slight change in interest rate has much higher effect highly on commercial bank and also investment pattern of country.
Impact on Commercial Bank
Actually interest rate spread (IRS) effect on commercial bank. Because bank’s overall profit and people borrowing trend or we can say investment trend depend on lending rate and bank’s expense depends on borrowing rate.
At first l will like to discuss about the interest rate regulation and mainly about the interest rate reform policy of Bangladesh. After this policy has been taken interest rate movement has become transparent and logical.
Interest Rate Reforms
Bangladesh began to implement financial sector reform measures in the 1980s and the interest rates were partially deregulated in November 1989 to introduce flexibility in determining deposit and lending rates. As a part of the process, Bangladesh Bank started to set the ceilings and the floors and individual banks were allowed to set their interest rates within the stipulated band. In April 1992 the interest rate bands for lending were removed for all sectors except agriculture, small industries, and exports while, for deposits, the ceilings were removed but the floors were retained. In this context, it is important to
References: Inflation Rate of Bangladesh in last Three years: Rate of Inflation | January, 2011 | December, 2010 | January, 2010 | Year | January, 2011 | December, 2010 | January, 2010 | Interest Rate | 9.54% | 8.06% | 4.39% | Economic Growth and GDP: Year | January, 2011 | December, 2010 | January, 2010 | Year | January, 2011 | December, 2010 | January, 2010 | Unemployment Rate | 4.80 % | 5.10 % | 2.50 % |