The Bangladesh Bank has injected Tk70,000 crore of new money into circulation during the current fiscal year to support the government’s budget expenditure, raising concerns about inflation. The central bank began printing money due to liquidity constraints in banks. Despite improvements in liquidity, new money continued to be injected to maintain interest rates below 9% for treasury bills and bonds. However, this approach has drawn criticism from economists, who argue that borrowing from banks would increase interest rates and control inflation more effectively. The increased circulation of new money has resulted in reduced interest rates for treasury bills and bonds. The government’s borrowing from banks is expected to exceed the target set for the fiscal year, further fueling inflationary pressures. Experts caution that the excessive circulation of new money may lead to price pressure in the future, and the country’s foreign payment capacity is being compromised.
Central Bank Prints Tk70,000 Crore to Support Government Budget
Source for more details: