DHAKA, Feb 10, 2025 (BSS) - Bangladesh Bank (BB) has expected that the 
exchange rates will remain stable, bolstered by significant improvements in 
the Balance of Payments (BoP). 

The central bank today made the expectation at its Monetary Policy Statement 
(MPS) for the second half of the fiscal year 2024-25 (FY25).

According to the MPS, this stability translates to reduced volatility in 
domestic commodity prices and contributes to overall economic resilience. 

BB is optimistic about the continued strengthening of the BoP, driven by the 
ongoing surge in inflow of remittances and promising prospects for export 
receipts, which will further support efforts to maintain price stability.

Discontinuing the devolvement facility for the government is a strategic 
decision aimed at mitigating the inflationary effects associated with the 
injection of high-powered money. 

This move reinforces the Government's commitment to sound economic 
principles. In tandem, a concerted effort to harmonize fiscal and monetary 
policies has enhanced the effectiveness of macroeconomic management, ensuring 
that both frameworks work synergistically to combat inflation and create 
conditions for stimulating growth.

Additionally, the government's strategic initiative to cut unnecessary 
expenditures is expected to fortify macroeconomic management, allowing for a 
more efficient allocation of resources and fostering long-term economic 
stability. 

The implementation of extensive measures to improve supply chains includes 
slashing tariffs on essential commodities, adjusting the Letter of Credit 
(LC) margins for critical goods, particularly in anticipation of the holy 
month of Ramadan, expanding open market sale operations, and facilitating the 
required imports of fertilizers to support agricultural production. 

Necessary stocks of fertilizer are now in place to ensure larger acreage 
under Boro cultivation. These initiatives are crucial for ensuring an 
increased supply of agricultural outputs including rice, potato and onion, 
which are vital for food security and price stability.

Finally, the outlook for global commodity prices remains on a downward stable 
trajectory, acting as a buffer against domestic inflationary pressures and 
further supporting the objective to maintain price stability. 

Through these strategic actions and favorable conditions, BB is confidently 
steering toward its inflation target, setting the stage for a healthier and 
more resilient economy. 

Historical experience reveals a consistent pattern: inflation typically 
starts receding in 6-12 months following an increase in policy rates and 
reaches the envisaged target ranges within 12-18 months. 

This historical lens provides us with valuable insights into the likely 
trajectory of inflation, reinforcing our faith in the projected timeline.