Taming inflation first priority

Controlling the skyrocketing inflation will be the first priority as a Bangladesh Bank governor, said the central bank new Governor Abdur Rouf Talukder.

However, the central bank and the Finance Ministry had already taken several measures to tackle the inflation, said the new governor in a press conference on Tuesday after joining Bangladesh Bank.

He replaced Fazle Kabir whose six-year tenure ended earlier this month. Abdur Rouf Talukder is the 12th governor of the central bank.

Controlling the inflation is one of the main jobs of the central bank as per the monetary policy. The present growing inflation did not come from the money creation. It was created from import, said Talukder.

The government and the central bank will have to work jointly to control inflation.

Inflation in May soared to 7.42% – an eight-year high in Bangladesh - mainly driven by massive increase in prices of food items as per the report of the Bangladesh Bureau of Statistics (BBS).

Abdur Rouf Talukder said stabilizing the exchange rate will be the second priority to him. Now the foreign exchange market is unstable due to lower inflow against higher outflow.

Maintaining a standard position of the foreign exchange reserve or to cover six months plus import payment will be the third priority, said the new BB governor.

The forex reserve is now under pressure due to the growing recovery from the Covid-19 pandemic.

“The price rise of various essential goods including oil and fertilizer in international market were the main reason for the pressure on forex reserve.”

Foreign exchange reserve in Bangladesh slipped below $40 billion after September 2022 as the Bangladesh Bank (BB) cleared the import payments to the Asian Clearing Union (ACU).

The country settled import payments worth $1.99 billion with the ACU last week and that is why the reserve came down to $39.80 billion on Tuesday for the first time in nearly two years.

The reserve stood at $48.06 billion in August last year.

Financial stability will be the fourth priority to him, said Talukder adding that this is the second vital job of the central bank. 

Bringing good governance and compliance in the non-bank financial institutions will be the fifth priority as the sector is facing lack of trust of people.

He told journalists that to increase investment in the private sector would be his sixth priority as the central bank governor.

“To achieve the GDP growth targeted by the government will be the final priority to me for this fiscal year,” said Talukder.

Replying to a question, the new BB governor said, “I don’t believe that there is any intervention in work as per the rules and regulation of the central bank.” 

“We will take suggestion from the government, from the economists and other stockholders but I don’t believe the government will intervene in our work.”

Interest rates of our neighboring countries are lower than Bangladesh, he said, adding that the interest rate cap or lending rate in our country did not put impact on banks’ profitability.