Bangladesh Bank announces monetary policy, raises policy rate
The Bangladesh Bank has raised the policy interest rate by 25 basis points to 8 per cent in the monetary policy for the second half of the current 2023-24 fiscal year, in an effort to bring down inflation to 6 per cent.
It will pull up the interest rates for the commercial bank credits and is expected to decrease the demand for loans. When the high interest rates slow down the supply of money to the economy, it also calms down inflation at one stage.
BB governor does not fear anyone as he joined the central bank on a contract, leaving his regular government job
Keeping inflation in check is one of the key responsibilities of the central bank and controlling the policy interest rate is the key tool in the process.
Habibur Rahman, chief economist of the Bangladesh Bank, announced the monetary policy for the January-June period at the central bank’s conference hall on Wednesday afternoon. Later, governor Abdur Rouf Talukder responded to different queries from the newsmen.
The governor expressed the regulator’s strict position against irregularities in the banking sector. Regarding his course of action, Abdur Rouf Talukder said he does not fear anyone as he joined the central bank on a contract, leaving his regular government job.
It mulls introduction of the crawling peg method to determine the currency exchange rate under the new monetary policy.
In the monetary policy, the growth target for private sector credit for June has been set at 10 per cent and that for the public sector at 27.8 per cent. The private sector posted a credit growth rate of 10.2 per cent in December, while the public sector registered 18 per cent growth.
The central bank is contemplating the introduction of the crawling peg method to determine the currency exchange rate under the new monetary policy. However, it is yet to disclose the exchange rate for the dollars.
Over the past year, the banking sector regulator has taken various initiatives to combat high inflation. Also, some significant measures were taken in line with the suggestions of the International Monetary Fund (IMF).
In the previous monetary policy, the Bangladesh Bank took initiatives such as introduction of the interest rate corridor system, withdrawing the interest rate ceiling, setting a uniform price for dollars and accurate calculation of forex reserves.