The New Nation - Internet Edition

BUSINESS REPORT

Bangladesh Bank has planned to review key interest rates to bring down inflation as it aims to achieve economic growth of 6.5 percent this fiscal year.

The country achieved growth of 6.2 per cent in the last fiscal year of 2007-08.

In its latest quarterly report for April-June 2008, Bangladesh Bank said the policy rates, including those for repurchase agreements, reverse repurchase agreements and government approved securities, will also be reviewed to anchor inflation expectations.

Bangladesh Bank has left key rates, the repo rate, unchanged at 8.50 per cent and the reverse repo rate at 6.50 per cent for more than a year.

The quarterly economic report said the Bangladesh Bank will closely monitor the monetary aggregates such as reserve money, broad money, and credit growth and shall take corrective measures if necessary.

After the upward trend in the first three quarters, consumer price inflation started to decline in the fourth quarter of the 2007-08 fiscal year, the report said.

Inflationary pressures will probably remain under control as a result of the central bank's growth-supportive monetary policy and the government's production-oriented policies, it added.

The government raised state-regulated prices of compressed natural gas in June and prices of fuel oil and urea fertiliser in July.

The 12-month average inflation was 9.87 per cent in May compared with 10 per cent in March and 7.2 per cent in the 2006-07 fiscal year.

While point-to-point inflation reached a high of 11.59 per cent in December 2007, it declined to 7.44 per cent in May 2008, the lowest over a 14-month period.

Presently, softening of inflationary pressure will require higher growth and higher production of essential food and other items in the face of a tight and unstable world market for these commodities, the Bangladesh Bank said.

The central bank listed a number of challenges ahead for the economy such as the possibility of natural disasters, rising global prices, socio-political instability, infrastructure bottlenecks especially power and gas shortages, and congenial business climate in the run-up to a general election in December 2008.