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Hike in salaries to cause rise in inflation for 2015: Bangladesh Central Bank

Hike in salaries to cause rise in inflation for 2015: Bangladesh Central Bank

DHAKA: Bangladesh central bank has expressed the fear that the proposed pay-hike for public servants might cause to rise in inflation and tumble the economy in the year 2015 that begins tomorrow.

In an update on macro-economic indicators released here the other day, the bank said the demand-pull impact on the price indices on the domestic market because of output growth might spur the rate of inflation that is now maintaining a low level.

The central bank while presenting the country’s economic outlook in 2015 said possible oil-price hike on the international market following political tensions in the Middle East might affect the domestic market.

However, the Bangladesh Bank (BB) has promised to keep these factors in mind while designing the upcoming monetary policy so the targeted 6.5 per cent inflation could be achieved.

Its projections saying that the central bank will help boost investment confidence by improving the state of governance in the country’s banking industry, the BB issued a press statement here the other day.

“One of the main targets of the financial sector will be to increase the purchasing power of the lower-and middle-income people,” the central bank said about the counter vailing measure to cool the heat generated by the government servants’ pay rises.

The central bank forecast that imports during the financial year (FY) 2015 might grow around 12 per cent. And the recent composition of imports of capital goods, machinery, and other production inputs signals the future empowerment of the economy.

The inflow and outflow of foreign currencies at the bank level are more frequent nowadays than before, suggesting a vibrant import demand for 2015, it said about another indicator of macroeconomic health.

Focusing on a flipside of the economic spectrum, the central bank said, “There remain some aspects of economic discomfort that include non-performing loans, excess liquidity, and some irregularities at the branch level of banking.”

In the middle of 2014, the BB witnessed a one-time jump of default loans.