Lower lending rate likely to influence inflation

Says BB governor

Bangladesh Bank Governor Atiur Rahman  yesterday said it will be a big challenge to control inflation if the lending rate comes down to single digit, reports UNB.
He made the remarks at a meeting with the leaders of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at the central bank headquarters in the city.
The Bangladesh Bank chief observed that the country’s inflation remained downward in the last few years due to lower food inflation and fall in commodity price on global market.  As a result, overall economy remains in a balanced position, he added.
“We should not impose anything on economy forcefully,” he said, adding that the lending rate will come down automatically if the inflation is controlled properly.
FBCCI president Abdul Matlub Ahmad, who led the business delegation to the meeting, urged the central bank governor to take initiatives to bring down the lending rate in all kinds of loans to single digit.
He also suggested introducing a sector-wise loan target for women entrepreneurs and take necessary measures to reduce non-performing loans. Mohammed Bazlur Rahman, director of FBCCI, called for taking more measures to promote the SME sector. Business leasers also demanded increasing cash incentives for the housing sector arguing that the sector is still suffering from the pinch of prolonged business stagnation.
The call from the business leaders came at a time when the lending rate in the banking sector has already started coming down at 11.05 per cent in January this year, dropping by 1.27 per cent from 12.32 per cent in the same period of the last year.
The deposit rate fell during the last year but not faster than the lending rate. The interest rate on deposit dipped by 1.05 per cent during the last one year reaching 6.21 per cent in January this year from 7.26 per cent of the same period of 2015.
The spread, the gap between lending and deposit rate, came down to the expected level of 4.84 percent in January this year from 5.05 per cent in the same period of the last year, according to the Bangladesh Bank data released recently.

 

Lower lending rate likely to influence inflation

Says BB governor

Bangladesh Bank Governor Atiur Rahman yesterday said it will be a big challenge to control inflation if the lending rate comes down to single digit, reports UNB. He made the remarks at a meeting with the leaders of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at the central bank headquarters in the city. The Bangladesh Bank chief observed that the countrys inflation remained downward in the last few years due to lower food inflation and fall in commodity price on global market. As a result, overall economy remains in a balanced position, he added. We should not impose anything on economy forcefully, he said, adding that the lending rate will come down automatically if the inflation is controlled properly. FBCCI president Abdul Matlub Ahmad, who led the business delegation to the meeting, urged the central bank governor to take initiatives to bring down the lending rate in all kinds of loans to single digit. He also suggested introducing a sector-wise loan target for women entrepreneurs and take necessary measures to reduce non-performing loans. Mohammed Bazlur Rahman, director of FBCCI, called for taking more measures to promote the SME sector. Business leasers also demanded increasing cash incentives for the housing sector arguing that the sector is still suffering from the pinch of prolonged business stagnation. The call from the business leaders came at a time when the lending rate in the banking sector has already started coming down at 11.05 per cent in January this year, dropping by 1.27 per cent from 12.32 per cent in the same period of the last year. The deposit rate fell during the last year but not faster than the lending rate. The interest rate on deposit dipped by 1.05 per cent during the last one year reaching 6.21 per cent in January this year from 7.26 per cent of the same period of 2015. The spread, the gap between lending and deposit rate, came down to the expected level of 4.84 percent in January this year from 5.05 per cent in the same period of the last year, according to the Bangladesh Bank data released recently.