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.
The Bangladesh Bank will increase the policy rate twice and interest rate once by October to tame double-digit inflation, central bank Governor Ahsan H Mansur said at a press briefing yesterday.
The spread between interest rates on deposits and loans rose to 6.03 percent, the highest in two decades, indicating that banks are making money at the expense of depositors and borrowers.
The interest rates on consumer loans, forced loans and overdue loans are likely to go up rapidly in the upcoming months, however.
"The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks," the Fed said in a statement.
The US Federal Reserve is widely expected to hold interest rates at a 22-year high for a third consecutive meeting on Wednesday as it continues to fight elevated inflation.
One key factor hampering the effectiveness of BB's policies is the delay in decision-making and significant transmission lags.
As the final stretch of the year approaches, there's relief in markets that the sharpest global monetary tightening cycle in decades is finally nearing an end.
The leaders of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) have sought the cooperation of the central bank so that the interest rate on loans does not increase by a large margin.
Industrial and Commercial Bank of China Ltd (601398.SS), Agricultural Bank of China Ltd (601288.SS), Bank of China Ltd (601988.SS) and China Construction Bank Corp (601939.SS) all cut their rates from Thursday, websites from each bank showed.
Conventional lenders in Bangladesh fell behind shariah-based banks in 2022 in terms of profit growth mainly due to the lower interest rate regime.
A second meeting on Friday between White House and Republican congressional negotiators on raising the federal government's $31.4 trillion debt ceiling broke up with no progress cited by either side and no additional meeting set.
The Federal Reserve is expected on Wednesday to raise interest rates and perhaps signal a pause in its 14-month tightening cycle, as policymakers balance the need to slow inflation against a pressing set of risks ranging from bank failures to the possibility of a U.S. debt default as soon as next month.
As the US dollar shortage persists, businesses in Bangladesh are increasingly finding it difficult to open letters of credit (LCs) since banks can’t supply the adequate American greenback needed to finance imports.
Come January there won’t be any volatility in the foreign exchange market -- was the overarching message from the government in the past couple of months. January has arrived, and the situation is dicey as before.
Do we have the political will to come out of it?
Financial conditions have tightened as central banks continue to hike interest rates. Amid the highly uncertain global environment risks to financial stability have increased substantially.
New Zealand's central bank on Wednesday lifted interest rates to a seven-year high and promised more pain to come as it struggles to cool red-hot inflation in an over-stretched economy.
Bangladesh Bank can better fix the currency turmoil by freeing both interest rate and exchange rate to adjust over time.
