Bangladesh Bank Governor Ahsan H Mansur said tightening monetary policy is the only globally practised remedy to heal inflationary pain, as businessmen opposed interest rate hikes for obstructing business expansion and job creation.
Inflationary pressure is being felt severely in the face of wage growth declines.
The target for January-June was 10%
The crawling peg and the mid-rate were introduced on May 8 this year
Kept repo rate at 8.5%, SDF rate at 7% and SLF rate at 10%
The central bank is expected to maintain a tight monetary stance for July-December
The peg system would be linked to a carefully selected basket of currencies and operate within a predefined exchange rate corridor
Bangladesh Bank also raised the benchmark policy rate by 25 basis points to 8 percent
The BB maintained a contractionary policy stance in the July-December of 2023-24
While the government’s latest monetary policy for the first half of fiscal year 2023-24 shows an attempt to be rational for the market, it lacks vigour to solve inflation and the dollar crisis.
Like in the outgoing financial year, the common people in Bangladesh will continue to suffer from higher consumer prices in 2023-24 as the factors behind the elevated level of inflation are unlikely to change dramatically.
On the surface, the monetary policy appears to be tuned to the need of the hour: bring down inflation and conserve reserves. But it comes caving down on careful reading.
The Bangladesh Bank has decided to increase the policy rate
The Bangladesh Bank may today raise its key interest rates to tame inflationary pressure but the attempt might go in vain since the monetary authority may not withdraw the interest rate cap on loans in a true sense.
The upcoming budget should target containing inflationary pressure to provide much-needed relief to consumers and be business-friendly to help the business community overcome the crisis stemming from the Russia-Ukraine war, said a number of businessmen and economists yesterday.
The upcoming budget poses significant challenges – arguably the most challenging in recent times – for economic policymaking in Bangladesh.
Bangladesh’s conglomerates have lost Tk 65,000 crore over the past one year because of the fluctuation of the value of the taka against the US dollar as loans have become costlier due to the volatile global economy, said a noted economist yesterday.
At the beginning of 2022, businesses were upbeat and many of them thought that the worst stemming from the losses induced by the coronavirus pandemic was finally over. That was short-lived.
Bangladesh’s $4.5 billion loan programme with the International Monetary Fund is expected to get the final approval on January 30, said the lender’s visiting top official yesterday.