Another policy rate hike this week: BB governor

The Bangladesh Bank will hike the policy rate in two more rounds, with the first coming this week, in a bid to control inflation under a contractionary monetary policy.

"A contractionary monetary policy will be followed as long as the inflation does not come under control. The policy rate will be hiked once this week and again next month," Governor Ahsan H Mansur told journalists today (23 September) during a briefing.

Earlier on 25 August, the Bangladesh Bank increased the policy rate by 50 basis points to 9% in an effort to combat high inflation, marking the third time this year that the key interest rate has been raised.

Governor Mansur had previously announced that the policy, or repo rate, would first rise to 9% and then potentially to 10% in phases.

The country's inflation dropped to 10.49% in August from the record 11.66% in July, marking a 1.17 percentage point decline – the largest decline since 2013, according to data from the Bangladesh Bureau of Statistics. The fall was primarily driven by the decrease in prices of essential foods, the data shows.

Audit of nine banks in liquidity crisis soon

Speaking about the current liquidity shortage in banks today, the governor said, "There are plans to merge some of the smaller banks that are in a liquidity crunch. Because the majority of these banks are now owned by the government.

"Initially, we will audit nine banks through a task force. We will audit a total of nine banks in three phases. Islami Bank will be audited in the first phase," he also said.

The central governor said the audit will focus on the loans given by the bank and identify the beneficiaries of those loans.

"Now the banks that are in a liquidity crisis have a positive net deposit. Yesterday these banks had a positive net deposit of Tk810 crore. This means, depositors are withdrawing less than the amount of deposits coming in."