Cenbank revamps monetary policy committee to tackle inflation

The Bangladesh Bank has revamped its monetary policy committee to include external experts in a bid to tackle inflation, which has been above 9% since March.

The move came in line with the recommendations from the International Monetary Fund (IMF) to strengthen monetary control and price stability.

The committee, which will be chaired by the central bank governor, will have seven members, including three external experts from academia and the private sector.

The other three members from within the central bank will be the chief economist, and deputy governor and director of the Monetary Policy Department.

The three external members are the chairperson of the Economics Department at Dhaka University, the director general of the Bangladesh Institute of Development Studies (BIDS), and an eminent economist from the country.

Previously, the monetary policy committee consisted of eight members who were internal officials of the central bank headed by the governor — including four deputy governors, chief economist, director and executive director of the Monetary Policy Department.

An official of the central bank said that until now the monetary policy committee of the central bank was informal. "As a result, it has to face criticism for failing to control inflation. So now the central bank has formed an institutional approach to formulating monetary policy. The central bank aims to bring inflation down to 8% by December."

Since last March, the general inflation has consistently remained above 9%, significantly affecting the cost of living, particularly for the low-income groups. Inflation slightly decreased to 9.63% in September, from 9.92% in August.

Food inflation also fell to 12.37% in September from 12.54% in August, highest in over a decade.

Bangladesh Bank Executive Director and Spokesperson Mezbaul Haque said, "Due to the new format of the monetary policy, our work will become easier. At the same time our coordination with different groups in decision making will be easier."

The new committee will formulate monetary policy for the January-June period of the financial year 2023-24.

The central bank on 5 October raised its key policy rate by 75 basis points to 7.25%, the highest hike in the last one decade. This is the second hike in three months and sixth since May last year when inflation just shot over 8% from below 6% in January 2022.