No changes in monetary policy right now Atiur says BB will follow inflation rates of both the base years until December
Bangladesh Bank is not going to bring any change in its monetary policy right now though inflation rate was shown around 3 percentage points less as per the new base year over the old one.
BB Governor Atiur Rahman said they will continue the existing monetary policy stance till December and will go by the inflation rate of the old base year till then.
The government last month introduced a more representative index of wholesale prices and brought forward the base year -- to 2005-2006 from 1995-1996 -- for calculating inflation in the changing structure of the economy.
The government will continue releasing two types of inflation data till December, on the basis of both the new and old base years.
The central bank governor said they will compare the two inflation rates in January, and if necessary, they will then bring changes in the monetary policy.
In line with the new base year, inflation on a point-to-point basis stood at only 5.21 percent in July, while the rate was 8.03 percent according to the old base year.
The central bank in July announced the monetary policy for the first six months of the current fiscal year and adopted a tight stance to contain inflation.
Inflation had been in double digits since March last year before starting to fall in April this year. The rate went down by 0.53 percentage point in July as per the old base year.
As inflation, especially that of non-food, had been soaring, the central bank in its monetary policy in January adopted a tightening stance to rein in credit growth.
The BB also asked the government to reduce its dependence on banks' money, and took some steps to hold back the depreciation of the dollar.
Finance Minister AMA Muhith yesterday at a programme told journalists that the falling trend in inflation was due to the central bank's monetary policy stance.
Muhith said the government has also followed a tightening approach in its fiscal policy from the beginning of the current fiscal year to minimise its wasteful expenditure.
He admitted the government was relaxed about its expenditure in the first six months of the last fiscal year.
The BB governor said, besides the tight monetary policy, the appreciation of the dollar also caused a fall in inflation.
He said a decline in the prices of imported products also contributed to the ease in inflation.
The BB will always remain active to bring down inflation, the governor said.
The Daily Star/Bangladesh/ 7th Aug 2012