Inflation, stability of currency rate main challenges for Bangladesh

The inflation outlook in the coming months will depend on further spillover of price from supply-demand mismatch, the ongoing Russia-Ukraine war, the volatility in the exchange rate and commodity price hike in the international markets, the central bank noted.

The budget deficit is also widening and government borrowing from the banking system, particularly from the central bank, has sharply increased recently, which could create upward pressure on the inflation outlook, the bank noted.

Meanwhile, the Ukraine war heightened the potential losses of export demand along with international commodity price hikes, which led to higher import costs and trade deficit, mounting pressure on exchange rates, the annual report said.

The main factors behind the negative overall balance in the balance of payment are higher import growth, negative growth of remittances and less inflow in the capital and financial accounts, it observed.

ALCHEMPro News Desk (DS)