Crawling peg to work if adjusted with real exchange rate

The Bangladesh Bank is set to introduce the crawling peg system for exchange rates, and it's considered a positive move. This method will be effective when adjusted to the real effective exchange rate.

We should have raised policy rates more aggressively to tame inflation. In this monetary policy, the central bank could have increased the policy rate by 100 basis points instead of 25 basis points.

Thus, increasing the repo rate gradually may not be effective. The central bank should raise the policy rate by a certain amount every month. If we had proceeded in this manner, everything would have come under control.

The central bank said it aims to bring down inflation to 7.5% in the current financial year. Additionally, regular policy initiatives will be undertaken to achieve a target of 6% inflation. However, this seems inconsistent, as our credit partners maintain inflation rates between 2-4%.

The pressure of inflation on the market will persist because the implementation of the advice received by the central bank from experts shows the opposite picture. There seems to be a lack of emphasis on immediate solutions to current problems. If policies are not implemented promptly, the issues will persist.

A SMART rate has been introduced for our consumer loans. This SMART rate change is based on the six-month average rate of Treasury bills and bonds. However, despite the increase in the SMART rate, it is not proving effective in banks. Formulating policies is crucial, but their successful implementation is equally important. Without proper implementation, the issues will not come under control.

Currently, the SMART rate is around 12%, although many banks have not implemented the 10% loan interest rate. This inconsistency needs attention and resolution.

I don't see any real steps being taken to address our dollar crisis. If the central bank significantly raises the dollar rate, our dollar inflow will likely increase. Simultaneously, our financial account would move towards positive territory.

It is also noteworthy that we haven't witnessed substantial reforms to overcome the crisis in the banking sector. The steps taken thus far have not been effectively implemented. Fifteen banks still face capital shortfalls, and, in addition, an abnormal amount of defaulted loans is increasing in the banking sector.