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.

Bangladesh Bank yesterday unveiled a wishy-washy monetary policy for the next six months that will prove to be ineffective in tackling the headwinds passing through the economy.

The Bangladesh Bank today raised its domestic credit growth target by 30 basis points to 18.5 per cent for the second half of 2022-23 in order to allow higher government expenditures.

Bangladesh Bank today said it would pursue a cautiously accommodative policy stance in the second half of the current fiscal year to contain inflationary and exchange rate pressures.

Bangladesh Bank today relaxed the lending rate cap for consumer loans, allowing banks to hike it up to 3 percentage points from the current level.

Bangladesh Bank has raised its policy rates by 25 basis points as it unveiled the monetary policy for the second half of the ongoing fiscal year.

Bangladesh Bank is going to unveil the monetary policy for the January-June period of the fiscal year 2022-23 this afternoon and return to the half-yearly policy after discontinuing it for three years.

Bangladesh’s trade deficit is projected to be $33 billion in the outgoing fiscal year as export earnings and remittances continue to fall below the overall import cost, said Bangladesh Bank in its monetary policy for the next fiscal year.

There have to be exchange rate and interest rate flexibilities in order to make the monetary policy of the Bangladesh Bank effective, said Zahid Hussain, a noted economist. 

The central bank of Bangladesh will have to use the monetary policy to stabilise the foreign exchange market to pave the way for curbing inflation through demand management, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.

The central bank yesterday unveiled a cautiously optimistic monetary policy for the second half of the fiscal year, keeping room to provide adequate supply of quality credit to support the growth and inflation targets.

Bangladesh Bank announces its new monetary policy for January-June with a target to tighten money supply and curb excessive lending.

In Fiscal Year (FY) 2014-15, global sovereign rating agencies Moody's, Standard & Poor's and Fitch assigned Bangladesh a 'stable' sovereign credit outlook.

If monetary policy autonomy is a priority, capital account liberalisation should come after a country’s transition to a flexible exchange rate – not before it.