In the context of ongoing high inflation, economists and bankers have advised not to lower the policy rate below 10% in the upcoming monetary policy.
They believe that keeping inflation under control should be a priority in the current economic reality, so it is important to keep the policy interest rate unchanged.
At the monetary policy consultation meeting held at the Bangladesh Bank head office in Motijheel in the capital on Thursday (June 4), economists and bankers exchanged views with the governor on the monetary policy for the upcoming July-December period.
At the meeting, economists said that high inflation pressure still exists in the country. In this situation, reducing the policy interest rate could hamper efforts to control inflation.
Therefore, they are in favor of keeping the policy rate unchanged until inflation is brought down to the target level.
They also mentioned that the recent increase in fuel and electricity prices has already started to affect the economy, which may further increase inflation in the coming days. In such a situation, most economists advised against easing monetary policy.
The meeting also emphasized the rapid and effective implementation of the Tk60,000 crore stimulus package announced by Bangladesh Bank.
At the same time, they urged the distribution of funds by ensuring proper rules and transparency, so that the risk of irregularities and corruption does not arise like in the past.
The economists said that the impact of the policy rate will be limited if there is no effective coordination between monetary and fiscal policies. In addition, if market supervision is not further strengthened, even high interest rates may fail to produce the desired results.
The meeting highlighted the issue of slowing credit growth in the private sector as a concern.
They emphasized increasing policy support and implementation capacity to expand business and increase investment. At the same time, the issue of maintaining public confidence in the banking sector was mentioned as very important.
The governor informed that the banking sector reform activities will continue as per the Banking Resolution Act. It was also informed that initiatives will be taken to appoint chairmen and managing directors for the merged banks quickly.
The meeting also discussed the foreign exchange market. Economists said that although the remittance flow is relatively satisfactory at present, it may not remain stable in the future.
On the other hand, if investment and imports in the private sector increase, the demand for dollars will increase, which may create new pressure on the foreign exchange market.
