Inflation to drop below 7% within September

Bangladesh Bank Governor Ahsan H Mansur expressed hope that inflation would come down to below 7 percent by August or September this year.

The inflation rate stood at 9.05 percent in May, down from 9.17 percent a month earlier, according to the latest data from the Bangladesh Bureau of Statistics (BBS).

However, it has stayed above 9 percent for the past 27 consecutive months.

"We are hopeful that the availability of foreign exchange -- which is a key driver of our economy -- will remain stable and we are maintaining a tight monetary policy," the central bank governor said during a post-budget press conference organised by the finance ministry at the Osmani Memorial Auditorium in the capital yesterday.

To tackle inflationary pressures, the central bank has hiked the policy rate several times, which now stands at 10 percent.

However, Mansur added that they would begin to gradually ease the monetary policy once inflation falls below 7 percent.

He also said stabilising the exchange rate was their main challenge in tackling inflationary pressure.

"The main challenge we had, we have largely overcome it," he said, adding, "Our main challenge was to stabilise the exchange rate because as long as we couldn't stabilise the exchange rate, we couldn't win the battle against inflation.

"If we could not stabilise the exchange rate, the prices of imported goods would rise, and that would push up prices in our domestic economy," he said.

Now the exchange rate has become relatively stable, hovering at around Tk 122 to Tk 123 per US dollar for the past seven to eight months, said the BB governor, adding that they were now feeling some relief.

"And since it has remained stable even after being left to the market, we have gained confidence that inflation expectations are moving in a positive direction," he said.