Central Bank Under Multifaceted Pressure Amid Policy Formulation

The central bank is currently under significant pressure as it works to formulate the second round of monetary policy for the January-June period of the current fiscal year. The International Monetary Fund (IMF) has demanded that the central bank adopt a more stringent monetary policy by raising the policy interest rate in order to reduce inflation. On the other hand, local businessmen argue that interest rates should not be raised further, and instead, they should be gradually reduced while maintaining stability in the current rates. The general public, meanwhile, is seeking both a reduction in inflation and an increase in the value of the currency and income levels. Economists suggest that a more integrated approach, rather than a one-sided strategy, is necessary.

While the central bank is considering raising the policy interest rate to control inflation, it is currently consulting with various stakeholders to gather their opinions before formulating the new monetary policy. According to IMF conditions, the central bank must take stringent measures such as raising interest rates and controlling the flow of loans. However, in line with the views of local businesspeople, raising the interest rate further is not viable. They are advocating for a reduction in interest rates to stimulate business activities while keeping the exchange rate of the dollar stable.

The central bank is expected to meet with economists soon to discuss the formulation of the monetary policy for the current fiscal year. Based on their feedback, a report will be prepared. Recommendations will be made after reviewing the opinions of various stakeholders and the global economic situation. One of the recommendations could involve increasing the policy interest rate to control inflation, while another may suggest controlling inflation without raising interest rates.

Under the IMF's loan agreement, Bangladesh currently owes $4.7 billion, and according to their conditions, the central bank must tighten monetary policy until inflation is brought down. However, businesspeople have expressed concern that raising interest rates would reduce the flow of loans, creating further pressure on them.

Meanwhile, the central bank is expected to announce the new monetary policy on February 10, though the date could be changed due to the need for further preparations.