Bangladesh Bank is set to announce the monetary policy for the second half of the current fiscal year (2024-25) while keeping the policy interest rate unchanged. Governor Dr. Ahsan H. Mansur will unveil the new policy at a press conference at 3:00 PM on Monday (February 10), with senior officials of the central bank in attendance.
The Board of Directors of Bangladesh Bank will discuss the monetary policy in a meeting before the announcement. No major changes are expected in the exchange rate management. The policy is being formulated considering a slight decline in inflation and the stability of foreign exchange reserves at $20 billion. This will be the first monetary policy under the interim government and Governor Mansur's first as well. However, the central bank is not planning to shift from a contractionary to an expansionary policy just yet.
Background & Previous Policy
On July 18 last year, Bangladesh Bank announced the monetary policy for the first half of the fiscal year, focusing on controlling inflation, stabilizing the exchange rate, and increasing foreign exchange reserves. Unlike the upcoming announcement, the previous policy was published only on the central bank’s website without a press conference.
At the time Ahsan H. Mansur took office as Governor, the short-term lending rate was 8.50%, which was raised to 10% in three phases (each by 50 basis points). This led to an increase in customer-level interest rates, which have now surpassed 15%. With inflation slightly declining in recent months, the policy interest rate will not be increased for now. However, business groups have been urging a rate cut to boost investment and employment.
Economic Stability & Foreign Reserves
During the first six months of the interim government, the economy has seen some stabilization after a period of gradual decline. Strict measures against money laundering have helped prevent further depletion of foreign reserves, which have remained stable at $20 billion for an extended period. As of now, reserves stand at $20.20 billion.
Additionally, the exchange rate of the U.S. dollar has remained stable between Tk 122 and Tk 124. Meanwhile, inflation declined to 9.94% in January, down from 10.89% in December.
