Bangladesh Bank has issued a special 90-day, collateral-free loan of Tk 1,000 crore to Exim Bank, which is facing a liquidity crisis. This loan, provided under demand promissory notes at an interest rate of 10.5%, raises concerns about potential inflation, as such loans typically involve printing money. Despite the central bank’s stance on maintaining a contractionary monetary policy to control inflation—evidenced by a recent 50-basis-point increase in the policy rate to 9% and a rise in the Standing Lending Facility (SLF) to 10.5%—the loan to Exim Bank is expected to increase market liquidity and could further impact inflation. The central bank’s action aims to address the liquidity issues affecting garment exporters, who have been unable to pay workers due to delayed payments. Prior to this, there had been a decrease in reserve money growth, but the injection of Tk 1,000 crore is anticipated to boost reserve money in September. This move follows a period of strict monetary policy and aims to stabilize the banking sector without direct money printing.
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