Increasing interest rates to control inflation works only for short time: DCCI president

Increasing interest rates to control inflation works only for a limited time, said Dhaka Chamber of Commerce and Industry (DCCI) President Ashraf Ahmed after a meeting with Bangladesh Bank Governor Ahsan H Mansur today (27 August).

"We also want inflation to be controlled. However, raising interest rates only works for a short period. Inflation affects businesses as it increases costs, such as the need to raise wages for our workers. We all need to make sacrifices to reduce inflation," said Ahmed.

He also mentioned that Bangladesh Bank has several schemes for financing the SME sector. 

"If these schemes can be accelerated, it will benefit SME entrepreneurs," he added.

The discussion also covered ways to simplify the process of foreign loans. 

Regarding the impact of interest rates on loan flow, he said, "We discussed how to manage the effects of rising interest rates on loan flow with the governor."

In response to a question about whether the issue of bank looting and money laundering by dishonest businessmen was discussed, Ahmed stated, "We, the ordinary businessmen, did not loot the banks. If someone embezzles bank money, ordinary borrowers like us have to bear the cost."

He further mentioned, "If we can reduce the amount of non-performing loans, the interest rate on bank loans will decrease. We support the actions Bangladesh Bank is taking against those who have looted funds."

Recently, Bangladesh Bank raised the policy interest rate by 50 basis points to 9% to control the rising inflation. This decision came into effect today. Three months ago, on 8 May, the central bank raised the policy rate by 50 basis points to 8.5%.

The decision to raise the policy rate aligns with the International Monetary Fund's (IMF) recommendations, as inflation has remained above 9% since March of last year.