REJAUL KARIM BYRON and MD FAZLUR RAHMAN

The central bank is set to return to its semiannual monetary policy stance after three years as per a suggestion of the International Monetary Fund (IMF) but local economists say the move would not bring about any change amid the lending rate cap and multiple exchange rates.

In the fiscal year of 2019-2020, the central bank moved away from a twice-a-year policy statement to an annual statement that was practised for the previous two decades. Thus, it began coming up with the policy in July alone.

In November, a delegation from the IMF, during its talks with the government over the latter’s $4.5 billion loan plan, called for unveiling the monetary policy on a quarterly basis since the economic situation is changing frequently, at home and abroad.

Accordingly, the Bangladesh Bank has begun its preparation and is holding discussions with stakeholders, including economic think tanks.

But economists say the return to the twice-a-year monetary policy would not yield any benefit amid the 9 per cent interest rate cap on loans and the multiple exchange rates.

The monetary policy statement would come at a time when foreign currency reserves are falling, inflation is running at a higher level, and the liquidity situation is tightening.

The inability of the government to arrest the deterioration of reserves, despite the taka depreciation and implementation of unorthodox policy measures, highlights the severity of the situation, according to Moody’s Investors Service.

The widening current account deficit due to unfavourable terms of trade, as well as the BB’s attempt to defend the taka, have eroded the reserves by around $8 billion since June.

Although it eased to some extent in November, inflation stood at 8.85 per cent last month amid higher prices of imported items and transport and energy costs.

Zahid Hussain, a former lead economist of the World Bank’s Dhaka office, does not see the return to a sixth-month monetary policy statement as a significant development.