The Monetary Policy Statement (MPS) of July-December 2023 by Bangladesh Bank (BB) introduced several new policy initiatives:
i.
Policy
Interest Rate Corridor: This is a system where the
central bank sets the floor and ceiling for short-term interest rates to guide
market interest rates.
ii.
Reference
Interest Rate for Lending: This could be a benchmark
interest rate that banks use to price loans.
iii.
Exchange
Rate Unification: This could involve merging multiple
exchange rates into a single rate.
iv. Calculation of Gross International Reserves (GIR) as per Balance of Payments and International Investment Position Manual (BPM6): This could involve changing the method of calculating GIR to align with international standards.
As for the impact on Treasury Management, changes in monetary policy can indeed have significant effects. For instance, changes in policy interest rates influence commercial interest rates. This can affect the cost of government borrowing and the return on government investments. The introduction of a policy interest rate corridor could provide more predictability for treasury management as it sets a range for interest rate fluctuations.
Moreover, the reference interest rate for lending could impact the cost of new government debt if the government borrows domestically. Exchange rate unification could affect the local currency value of foreign currency-denominated debt payments and receipts.
However,
the specific impacts would depend on the details of the changes and the broader
economic context. It's also important to note that the effects of monetary
policy changes can take time to materialize. Therefore, ongoing monitoring and
adjustment would be necessary. Please consult with a financial advisor or
professional for more specific insights.