Inexorable inflation will be cooling from January and fall to 4-5 per cent by end of the next fiscal year (FY2025-26), the Bangladesh Bank governor draws the latest timeline on the back of remedial measures.
Dr Ahsan H Mansur pins his hope on stable exchange rate, tightened monetary policy and supply-side remedies in the inflation combat.
The central-bank chief says people of the country will start to enjoy downtrend in the higher inflationary regime from next month (January) when consumers, being hit hard by the higher inflationary pressure, will be able to buy potato at as low as Tk 20 a kilogram and vegetables at much lower prices.
To get to the goal, the banking regulator has done all possible from its part while the interim government taken necessary measures to overcome the existing supply-side challenges through slashing import duties on all major commodities, including rice and edible oils.
Simultaneously, he said, the central bank told the fiscal-part authority (the ministry of finance) to reduce bank-borrowing target allowing the private-sector players to get more formal credits.
He was speaking as chief guest at a dialogue on 'Tipping Points of Reform Agenda for the Turnaround of the Banking Sector of Bangladesh' at the Bangladesh Institute of Bank Management (BIBM) auditorium in Dhaka.
Dr Md. Akhtaruzzaman, Director-General of BIBM, chaired the dialogue where BB deputy governors Nurun Nahar and Dr Md. Habibur Rahman, among others, also spoke.
Sharing reasons to become confident in controlling inflation, the BB governor said the exchange rate remains stable for long, the monetary policy is tight and policies to check supply-side obstacles in place.
"We've done all possible efforts. Now we are waiting for results. We can't do anything beyond that, but I am confident that the result has to happen," Mr Mansur told the meet. About the inflation-related target of the central bank, he said they want to cut the inflation to 7.0 per cent by June next and 4-5 per cent by end of the next fiscal year.
"You (audience) will see media starting writing articles over inflation in a different way very soon."
Talking about the interest rate, the governor said the monetary policy is tight and they will keep it until June next. If the inflation rate dropped to their target, they would start to bring down the interest rate.
The economist-turned banking regulator defines four pillars of the financial market: banks, stock market, bond market, and insurance.
"But only banking-sector performs are relatively better despite too many challenges," he said about a lack of support from the other pivots.
But situations of other pillars have not been performing to minimum level. "As a matter of fact, the banking sector has been bearing the burden of all forms of funding needs", which put extreme pressure on the banks' liquidity through enhancing the volume of non-performing assets.
"The long-term financing needs cannot be possible to meet sustainably unless long-term financing sources like bond and insurance markets are developed," he said.
In fact, the overall share of financial sector to the GDP (gross domestic product) keeps shrinking over the years from 64 per cent in 2016 to 52 per cent now, he points out.
"It is dropping because of the growing corruption and irregularities that we saw in the past. It (the ratio) should be over 100 per cent," he said.
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