Bangladesh Bank (BB) will announce the monetary policy statement (MPS) for the second half (January-June) of the current fiscal 2023-24 on January 15 amid domestic and global challenges.
As the previous policy statement, the new policy will prioritise controlling inflation and thus will be more contractionary. So, there may be a reduction in the flow of money in the market, potentially leading to increased interest rates on loans, insiders said.
In 2023, Bangladesh Bank faced various challenges and worked diligently to address them throughout the year, said Mezbaul Hauqe, spokesperson and executive director of Bangladesh Bank.
He said the central bank was trying to address various challenges that the economy was going throughout 2023, and it achieved some progresses in this regard.
To control inflation, BB made banks interest rate market-driven and stopped providing money to the government, among others, he said. In this part of the fiscal 2024, ensuring corporate governance will be a key focus for Bangladesh Bank.
On December 6, 2023, the central bank sought inputs from economists for adopting the new monetary policy for the second half of fiscal 2023-24. Opinions and advices were also sought from various stakeholders.
Moreover, in October, Bangladesh Bank restructured the Monetary Policy Adoption Committee, expanding its membership to include three external individuals.
It revises its monetary policy twice a year. This policy is essential for stabilising the countrys economy, aiming to boost the gross domestic product growth while managing inflation and fostering employment. Another critical aspect is maintaining exchange rate stability.
The first half of the current financial years monetary policy, covering July to December, was announced on June 18, 2023. Furthermore, significant changes have been made to the management framework of monetary policy in line with International Monetary Fund (IMF) guidelines. This includes the initiation of an interest rate targeting corridor to regulate the money flow on the market.
On November 26, 2023, Bangladesh Bank raised the highest ceiling of the policy rate corridor for lending facility to 9.75 percent from 9.25 percent, while the lowest limit of the standing deposit facility rate was raised to 5.75 percent from 5.25 percent.
The special repo rate was renamed as the SLF and the reverse repo was renamed as the SDF. Additionally, the central bank raised banks lending rates by 25 basis points to 11.18 percent.
