UNB, Dhaka :
Contradicting Finance Minister AMA Muhith’s stance on new pay hike for government employees that it would not push up inflation, Bangladesh Bank on Monday said ‘an upward pressure will remain’.
Explaining its prediction about economy, the central bank said: “The reasons include the new pay scale, the possibility of oil price hike because of political tension in the middle east, and finally, the demand pull impact on the price level because of output growth.”
Bangladesh Bank made the forecast while making its own assessment about the whole economic performance of the country and also projecting the economic possibilities in new calendar year 2015.
Earlier, while receiving the Pay Commission report, Finance Minister AMA Muhith
had said: “Absolutely not. It (new pay scale) will have no impact on inflation.”
About the inflationary concern, the central bank said it will keep these issues in mind and design the upcoming monetary policy accordingly so the targeted 6.5 percent inflation becomes achievable.
“If the stimulation in domestic demand that the economy experienced at the fag end of 2014 is continued, earning a growth rate of 6.5 percent or more will not be difficult in 2015.”
About the economy of outgoing year 2014, the BB said there remain some aspects of economic discomfort that include non-performing loans, excess liquidity, and some irregularities at the branch level of banking.
“While most of them surfaced as the staggered toll of political disturbances of 2013, Bangladesh Bank girded itself up to check the negative trend and undertook corrective measures”.
In the middle of 2014, the central bank said it witnessed a one-time jump of default loans, which happened because of various reasons including new best practice of classification and provisioning rules as well as political instability.
Bangladesh Bank claimed that it has brought down the net default loans to a moderate level. “Total default loans are on the wane as a result of improved supervision and close monitoring from the central bank leading to higher level of loan recovery”.
It said, the economic developments of 2014 conveyed mixed signals.
Most financial indicators displayed remarkable progress.
However, according to BB assessment, some opportunities for improving infrastructure and revenue mobilization still remained.
“We need to look at them in 2015. Political turbulence, hartal, and blockades that spanned through 2013 almost entirely took heavy toll on the economy of the country. As a result, investment stagnancy was a highly discussed topic in the whole year of 2014.”
The central observed that the aftermath of 2013’s mayhem created some degree of uncertainty in investment. Nevertheless, investment began to accelerate around the end of 2014. Excess liquidity of the dollar and taka in the local market began to evaporate, suggesting a revival of trade and commerce.
Contradicting Finance Minister AMA Muhith’s stance on new pay hike for government employees that it would not push up inflation, Bangladesh Bank on Monday said ‘an upward pressure will remain’.
Explaining its prediction about economy, the central bank said: “The reasons include the new pay scale, the possibility of oil price hike because of political tension in the middle east, and finally, the demand pull impact on the price level because of output growth.”
Bangladesh Bank made the forecast while making its own assessment about the whole economic performance of the country and also projecting the economic possibilities in new calendar year 2015.
Earlier, while receiving the Pay Commission report, Finance Minister AMA Muhith
had said: “Absolutely not. It (new pay scale) will have no impact on inflation.”
About the inflationary concern, the central bank said it will keep these issues in mind and design the upcoming monetary policy accordingly so the targeted 6.5 percent inflation becomes achievable.
“If the stimulation in domestic demand that the economy experienced at the fag end of 2014 is continued, earning a growth rate of 6.5 percent or more will not be difficult in 2015.”
About the economy of outgoing year 2014, the BB said there remain some aspects of economic discomfort that include non-performing loans, excess liquidity, and some irregularities at the branch level of banking.
“While most of them surfaced as the staggered toll of political disturbances of 2013, Bangladesh Bank girded itself up to check the negative trend and undertook corrective measures”.
In the middle of 2014, the central bank said it witnessed a one-time jump of default loans, which happened because of various reasons including new best practice of classification and provisioning rules as well as political instability.
Bangladesh Bank claimed that it has brought down the net default loans to a moderate level. “Total default loans are on the wane as a result of improved supervision and close monitoring from the central bank leading to higher level of loan recovery”.
It said, the economic developments of 2014 conveyed mixed signals.
Most financial indicators displayed remarkable progress.
However, according to BB assessment, some opportunities for improving infrastructure and revenue mobilization still remained.
“We need to look at them in 2015. Political turbulence, hartal, and blockades that spanned through 2013 almost entirely took heavy toll on the economy of the country. As a result, investment stagnancy was a highly discussed topic in the whole year of 2014.”
The central observed that the aftermath of 2013’s mayhem created some degree of uncertainty in investment. Nevertheless, investment began to accelerate around the end of 2014. Excess liquidity of the dollar and taka in the local market began to evaporate, suggesting a revival of trade and commerce.
