In response to ongoing economic challenges, the Bangladesh Bank may further increase the policy rate, currently at 8.50%, to 9.00% by adding 50 basis points. This adjustment aligns with the International Monetary Fund's (IMF) recommendation to raise the policy rate by December. However, with the inflation rate reported at 9.89% in May, the Bangladesh Bank may raise the policy rate more than 9.00% to control the higher inflation.
The exact figure
will be confirmed upon the release of the new monetary policy. which is
expected to adopt the contractionary monetary policy, aimed at reducing the
inflation rate.
An increased policy rate will
impact borrowing costs, leading to higher interest rates and a subsequent
burden on consumers. The raising interest rates are likely to reduce investment
due to the increased cost of borrowing, thereby decreasing the money supply in
the market.
Bangladesh Bank will focus its
existing contractionary monetary policy framework. Nonetheless, the primary
objective of the central bank remains the reduction of the inflation rate to
stabilize the economy.
Overall, it is the crucial time for
Bangladesh bank to implement necessary measures to tighten prudential
regulation in order to bring the financial condition under control.
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