The Bangladesh Bank will consider slashing the policy rate to 7 percent by March, provided that rampant inflation, which has hovered above 9 percent for nearly two years, eases to 5 percent by then, Governor Ahsan H Mansur said yesterday.
Bangladesh inflation soared (5.86 percent to 11.38 percent in 2022-2024), driven by global shocks and food prices.
Govt must rein in inflation, adopt more business-friendly policies
While stabilising the economy is a priority, the roots of Bangladesh’s recent turmoil lie in a crisis of governance.
The interim government is set to import seven lakh tonnes of rice, the highest in the last seven fiscal years, as it looks to shore up its depleting food grain stock and ease the cost of living crisis for the low- and fixed-income people battered by the prolonged high inflation.
Arrival of winter vegetables contributes to the decline
Many low-income and unskilled workers in Bangladesh’s agriculture, industrial and service sectors are being compelled to reduce consumption as rising inflation eroded their real incomes over the past three years.
Even after the political changeover in early August, the domestic market has been reeling under the influence of oligarchs, according to economist Hossain Zillur Rahman.
Inflation rises to 10.87 percent in October from 9.92 percent in September
If one looks at the inflationary measures that are proposed in the FY2022-23 budget, there are ample reasons to be frustrated.
The government has set an inflation target of 5.5 per cent for the next fiscal year although the prices of basic commodities are sitting at elevated levels for higher commodities prices globally amid lingering supply chain disruptions and the Russia-Ukraine war.
Macroeconomic stability has been a hallmark of Bangladesh’s development strategy. This has served the country well, especially in terms of providing a solid enabling environment for the private sector.
The inflation rate comes down slightly to 5.47 per cent in October from 5.54 per cent in September due to price fall in some non-food and food items except onion.
