The Bangladesh Bank will declare its monetary policy statement for July-December of the 2024-25 financial year tomorrow, focusing on checking inflation rate which has been nearly 10 per cent in recent months.
BB officials said that the policy would be contractionary, focusing heavily on inflation control.
In line with the 2023-24 financial year budget, the central bank had set a target to keep inflation at 7.5 per cent.
However, by the end of June, the average inflation rate surged to 9.73 per cent. For the current financial year, the goal has been set to limit inflation to 6.5 per cent.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, told 抖阴精品 that the central bank should tighten the money supply to combat inflationary pressures.
He also suggested raising the policy rate to 10 per cent to increase the cost of borrowing.
Mansur emphasised that the Bangladesh Bank should halt printing money to lend to the government and to support certain banks.
Bankers said that the economy began to recover from the stagnation caused by the Covid pandemic around mid-2021, leading to increased demand. Following this, the Russia-Ukraine war significantly raised global commodity prices.
During this period, most countries raised interest rates to control inflation by curbing demand.
However, in Bangladesh, the interest rate cap remained unchanged at 9 per cent until June 2023.
Moreover, in the 2022-23 financial year, the Bangladesh Bank provided nearly Tk聽98,000 crore to the government by printing money.
Additionally, efforts were made to artificially maintain the value of the dollar at Tk聽86.
Due to these factors, inflation continued to rise, leading to the decision on May 8 to allow market-based interest rates.
On the same day, the policy interest rate was increased by 50 basis points, setting the repo rate at 8.5 per cent, and the dollar rate was raised to Tk聽118 from Tk聽110.
Furthermore, in the past financial year, the government鈥檚 debt to the Bangladesh Bank was reduced by Tk聽6,457 crore.
The financial market has been struggling with a severe dollar crisis, which compelled the central bank to sell nearly $34 billion from its foreign exchange reserves over the past three years, reducing the reserve to $20.46 billion on July 4.
The substantial dollar sales mopped up an equivalent amount of money from the banking sector, creating an acute liquidity crisis and reducing lending capacity.
On the previous occasions, the Bangladesh Bank governor and the other senior officials of the central bank announced the monetary policy through a press conference, allowing reporters to ask questions about the policy.
This time the central bank is going to release the MPS on its web site, BB officials said.
