Monetary policy likely in 3rd week of July

Bangladesh Bank (BB) is likely to make public the monetary policy for the first half of fiscal year 2024-25 in the third week of July, aiming to bring down inflation which has persistently remained high.

Inflation in Bangladesh has been hovering at over 9 percent since March last year and the central bank's existing tight monetary policy stance is yet to help cool down consumer prices.

The BB is preparing to announce the new monetary policy sometime between July 15 and July 20, said a member of the monetary policy committee.

As a part of the preparations, the monetary policy department of the BB will start holding meetings with stakeholders and economists from July 7.

The monetary policy department set a meeting with central bank officials of the executive director grade and above on July 7 to avail opinions on the preparation of the new monetary policy.

Then, they will hold meetings with other stakeholders and economists until July 15.

The central bank has taken a series of initiatives to tackle ongoing economic challenges, especially to rein in skyrocketing inflation, all but to no avail.

On a 12-month average during June 2023 and May 2024, the inflation rate was 9.73 percent, much higher than the BB's target of 7.5 percent for the outgoing fiscal year of 2023-24.

The government has set a goal to contain the consumer price hike at 6.5 percent for fiscal year 2024-25.

The banking regulator raised the policy rate several times since May 2022 to increase the cost of money.

In May the BB raised the policy rate by 50 basis points to 8.5 percent to rein in runaway inflation.

In the same month, the central bank relaxed the bank interest rate and US dollar exchange rate as per the prescription of the International Monetary Fund.

Central bank officials said the banking regulator was likely to hike the policy rate further to tame inflation.

Industry insiders said the BB was still injecting money into some weak banks, for which, despite the presence of a tight monetary policy, it has not been possible to cool down inflation.

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, at a discussion recently said the policy rates should be increased further from the current 8.5 percent to at least 10 percent without further delay to curb high inflation.