Bangladesh Bank Governor Abdur Rouf Talukder on Monday said that the country's ailing economy will hopefully make a recovery by June next year.
"There is nothing to worry about. We have passed the tough times and are now at the bottom line. There is no possibility of going further down," he said.
"We will bounce back by the end of this fiscal year," the governor said at a views exchange meeting with the executive committee members of the Economic Reporters Forum (ERF) at his office.
The governor said the current account balance has already reached positive territory this quarter and he is hopeful that the financial account will start to become positive by next March and moderately positive by the end of June.
The governor said: "During the Bank-Fund Annual Meeting in Marrakech last October, the US Treasury Secretary and Fed Chairman opined at the G20 meeting that inflation rate in the US may come down to 2.25% by the year end, and 2% by first quarter of 2024. So we can imagine that there will be no increase in Fed policy rate. If it happens then secured overnight financing rate (SOFR) rate will start to decline from March 2024."
Responding to a query, the governor said it is undeniable that the import restrictions are causing some short-term damages.
"We have taken a number of measures to ensure that the supply chain is not disrupted," Talukder also said.
"If we can contain demand and increase supply, inflationary pressure will lessen significantly."
Talukder said that the country's overall economy is doing very well, with strong fundamentals.
He said the International Monetary Fund (IMF) agreed to disburse the second tranche of a $4.7 billion loan despite Bangladesh's failure to meet targets on foreign exchange reserves and revenue earnings, due to the country's sound economic fundamentals.
The governor said Bangladesh's economy has two main challenges -- high inflation and the exchange rate.
"We have set a target to bring down the inflation rate to 8% by December and 6.5% by June. If we can achieve this, we can say that we have bounced back to our previous position," he said.
On the exchange rate, the governor said: "We will move to a crawling peg within a band, for which the IMF will provide technical assistance. We will do this when our financial account starts to perform well. I will remain in a crawling peg for one or two years and when I see that our position has returned to like it was in the past, we will move to a market-based exchange rate."
A crawling peg is a system of exchange rate adjustments in which a currency with a fixed exchange rate is allowed to fluctuate within a band of rates.
The par value of the stated currency and the band of rates may also be adjusted frequently, particularly in times of high exchange rate volatility, according to investopedia.com.