# Dollar rates may be left up to the market
# Crawling peg method may omit
# Inflation above 9 Pc for 14 consecutive months
# Inflation can definitely be controlled: Former Governor Dr Atiur Rahman
# Taka’s appreciation is not possible without change in dollar policy interest rate: DCCI president
The value of the taka is falling against the dollar. In such a situation, another monetary policy is going to be announced in mid-July. Inflation has increased in the country due to the failure of the monetary policy announced by increasing the interest rate. The main objective of monetary policy this year will be to curb inflation. New announcements may come to leave the dollar rate to the market. The much-discussed crawling peg method may be omitted. The senior officials of Bangladesh Bank gave such a glimpse.
They said that Bangladesh Bank is concerned about the current reserves. The reason for this is that the exchange rate of the dollar is not left to the market. Therefore, the issue of leaving the dollar rate to the market is being considered with special importance in monetary policy. There are no complaints of trouble in paying the import bills in the banks. Sufficient dollars are also available in the open market. Meanwhile, the third tranche of the International Monetary Fund (IMF) loan of 1.15 billion dollars has been added to the reserve. Along with that, remittances sent by expatriates have also increased. The central bank stopped selling dollars in June to keep the mercury above the reserve thermometer. With a total of 27.15 billion dollars in hand, the reserve situation can be said to be normal now. In this situation, the governor initially agreed to leave the dollar rate to the market in the new monetary policy.
It is known that although there is a rule to announce the monetary policy at the beginning of July, the governor is currently in France. A member of the monitoring policy is on a visit to China. For this reason, there will be a meeting with those concerned about monetary policy from July 7. The final meeting of the Monetary Policy Committee is likely to take place on July 11. The committee will seek a date from the governor from that meeting. If all goes well, the new monetary policy will be announced in mid-July.
A slowdown in private investment and trade due to rising interest rates coupled with pressure on commodity prices has dampened many of the government's achievements. Governor Abdur Rauf Talukder is under pressure now. Therefore, the main goal of this monetary policy will be inflation control. Inflation has been above 9 percent for 14 consecutive months under the pressure of unbridled commodity prices. The main objective of Bangladesh Bank's monetary policy announcement last January was to reduce inflation to '6 and a half percent'. That was not possible; rather, under the pressure of high inflation, the common people's confidence and pocket is down.
Deputy Governor of Bangladesh Bank and former Chief Economist Dr Habibur Rahman said, "The main challenge of the central bank is to bring inflation under control. Contractionary monetary policy is being formulated to implement the target. In that case, the price of the dollar and the interest rate will be analyzed carefully. There is little scope for new measures to control inflation. Bank loan interest rate has already increased from 9 percent to over 15 percent. Still, policy can make money more expensive by raising interest rates. This will further increase the interest rate of the loan.
Dr Atiur Rahman, the former governor of Bangladesh Bank said about the upcoming monetary policy that the monetary policy should be kept contractionary for some time. Therefore, the central bank's policy interest rate should be increased again. The scope of refinance programs for micro and small entrepreneurs should be increased. However, ease of access to bank loans is more important than interest rates for SMEs. That is why MFIs take more loans and pay them back on time despite the higher interest rates. There is no alternative to monetary policy effectively making government spending more efficient and contractionary. We need to use monetary policy and fiscal policy in balance. If the market management is made more orderly and extortion is stopped, the commodity market is kept competitive and the exchange rate of taka and dollar is kept stable, it is possible to bring inflation down. But it will not decrease suddenly. It will take time.
President of Dhaka Chamber of Commerce Industries (DCCI) Ashraf Ahmed said that the rise and fall of the dollar price depends on the interest rate of the dollar. Therefore, I don't think there is much room for change in the value of our money unless the policy interest rate of the dollar changes. Here we have our own issues, not our balance of payments management that works in the short term. It actually takes time to work. Because I think, as long as the interest rate of the US dollar is changing, the trend is not changing. LC rate of all EME or Indian Rupee is increasing due to this trend. In the case of interest rate hikes, interest rates are rising due to the impact of both the contractionary monetary policy and the contractionary budget. If the average interest rate rises above 13 and a half or 14 percent, there will be pressure on the bank management. In this case, it will be less possible to sustain ordinary traders. That is why we think, keeping this thing in mind in monetary policy, if the interest rate rises after a point, then we have to get out of the sense of contractionary monetary policy.
ZH
