New monetary policy tomorrow

A half-yearly monetary policy statement may be announced tomorrow (Thursday) with contractionary stance on money supply as curbing the persisting high inflation continues to influence Bangladesh's financial front.
For the first time ever, the central bank is going to unveil the July-December MPs through its website posting on Thursday afternoon-possibly for averting a press boycott.
People familiar with the developments at the Bangladesh Bank told the FE that the monetary policy for the first half of the current fiscal year may be tightened as it may raise the policy rate from its existing 8.5 per cent to tame the stubbornly higher inflation on the economy impacting lives of limited-income people.
Spokesperson for Bangladesh Bank Mr Saiful Islam told the FE that the new MPS would be available at 3:00 pm on the day on its official website at https://www.bb.org.bd/en/.
Usually, the central bank rolls out the MPS through press briefing where the Governor of Bangladesh Bank responds to media queries relating to the monetary policy stances of the regulator.
But this time around, members of Economic Reporters Forum or ERF has a stand to stay away from the press briefing following a dispute over their access to the central bank.
The central bank Tuesday concluded all its formalities in a meeting of its Board of Directors before coming up with the monetary policy.
It had earlier held meetings with the stakeholders for the monetary policy to be announced on July 18.
Economists opine that the MPS should have been tightened further in order to contain the inflationary pressure on the economy as it is still high with prices spiralling further.
Executive director of the Policy Research Institute of Bangladesh or PRI Dr Ahsan H. Mansoor says containing inflation is a major challenge for the central bank.
"Our inflation is at an all-time high. Monetary policy must be contractionary to reduce inflation," says the former IMF executive about the exigency of continuing with a clench-fisted stance on spending.
At the same time, he suggests, Bangladesh Bank should stop printing money in order to curb inflation.
Chairman of RAPID Bangladesh Dr Mohammad Abdur Razzaque feels that the current monetary-policy stance must be maintained and careful attention must be given so that any built-up momentum in reining in inflationary pressures is not lost.
He says the central bank should maintain its position of not "creating money" for deficit financing of the budget.
"Close coordination with the Ministry of Finance should be pursued so that the monetary-policy objective is not undermined by fiscal-policy stance."
He suggests that maximum effort is now needed to maintain at least the current level of foreign reserves. Otherwise, any potential downward adjustment of the taka would add to the current inflationary pressure.

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