In its latest monetary policy review report for the last fiscal, the Bangladesh Bank said elevated inflation resulted from higher prices of imported items, upward adjustments in fuel and energy prices, and the lack of a competitive environment in the market.

The bank indicated the continuation of a tight stance in the upcoming monetary policy for the first half of FY25, scheduled to be announced in this month.

"Monetary policy would need to be restrictive for sufficiently long to return inflation to around the 7.5-per cent target sustainably in the medium term, and further tightening would be required if there were evidence of more persistent inflationary pressures," said the report.

Challenges that may affect the country's economy include the Russia-Ukraine conflict and turmoil in the Middle East, the bank report said.

"These conflicts could potentially induce supply shocks, which could reverse the global disinflation trend and generate domestic inflationary pressure," it noted.

To improve financial sector stability, it has reduced non-performing loans to a certain level and aims to promote good governance within the banking industry by 2026.

A road map encompassing critical action measures for banks and financial institutions has been prepared to ensure discipline, governance and credibility in the financial sector, according to domestic media reports.

These steps are expected to contribute to economic stability, foster sustainable growth and enhance financial health, the bank added.

Fibre2Fashion News Desk (DS)