Traders warns of economic impact amid rising interest rates

Mazharul Islam Mitchel 

The recent increase in loan interest rates aimed at curbing inflation has sparked concerns within Bangladesh's business community, impacting commerce across various sectors.
As production costs escalate due to higher borrowing expenses, the prices of goods have surged in the market. This inflationary pressure is exacerbating financial strain on businesses already grappling with economic slowdowns and reduced consumer spending.
Moreover, the rise in interest rates has compounded the challenges for businessmen, many of whom are struggling to service their existing bank loans. This has led to a notable increase in both the volume and rate of defaulted loans within the banking sector.
Mahbubul Alam Banik, speaking on behalf of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), expressed apprehension about the situation. He stated, "The sharp increase in interest rates has pushed many businesses to the brink of bankruptcy. If rates continue to rise, the situation will only worsen."
Banik highlighted assurances received from the Governor of the Central Bank regarding interest rate stability. He added, "We understand that banks are now offering loans at rates between 13.5 to 14 percent. Any deviation from this will prompt us to lodge complaints with Bangladesh Bank and the government." The FBCCI continues to advocate for measures to stabilize lending rates and alleviate financial pressures on businesses. They emphasize the critical role of accessible credit in sustaining economic growth and ensuring the viability of enterprises across Bangladesh. As stakeholders monitor developments closely, the impact of these financial dynamics on the broader economy remains a focal point of concern and strategic planning.
Kamran T Rahman, President of the Metropolitan Chamber of Commerce and Industry (MCCI), has voiced concerns over the escalating challenges faced by traders in light of recent increases in interest rates. He cautioned that further hikes in monetary policy could exacerbate difficulties for businesses, potentially straining the economy.
Rahman emphasized the need to prioritize controlling inflation while ensuring the viability of businesses. He stated, "Traders have already endured significant hardships due to the recent surge in interest rates. If monetary policies continue to raise rates, it will only add to the burden, making it more challenging for businesses to thrive."
Highlighting the delicate balance required in economic policies, Rahman underscored the importance of coordinated efforts. "Controlling inflation is crucial for the well-being of the common man, but it is equally vital to support the survival of businesses," he added.
The MCCI President stressed that a harmonized approach is essential to safeguarding economic stability and promoting sustainable growth. He urged policymakers to consider the impact on businesses and the broader economy when making decisions regarding interest rates and monetary policies.