CBM implements monetary policies to curb inflation

The Central Bank of Myanmar (CBM) uses monetary policies to control inflation and achieve price stability to a certain extent on 3 May.
CBM is laying down monetary policies to effectuate economic growth after analyzing the gross domestic product growth, currency situation, bank loans to GDP ratio, household debt to GDP ratio, etc. Additionally, among monetary policies, instead of raising interest rates, hiking the minimum reserve requirement ratio of the private banks in Myanmar currency and paying interest on excess reserves are also practised.
At present, bank deposits and loans are increasing. However, in order to control an increase in currency-in-circulation and cut inflation, the minimum reserve requirement ratio was increased to 3.75 from 3.5 per cent. Interest on excess reserve was also raised to 3.8 from 3.6 per cent in May 2024.
The increase in interest on excess reserves might support the annual interest rate for saving deposit accounts and contribute to more financing for the private sector. It can decrease the amount of money in circulation and reduce inflation pressure when banks make more deposits in current CBM accounts.
CBM tends to control inflation by raising interest rates. This way, the US dollar gains, whereas the currencies of regional countries depreciate. Myanmar also suffers high imports with kyat devaluation against the currencies of trading partners’ rising consumer price index amid the trade deficit.
CBM announced that it has been closely monitoring the domestic and international market climates to find causes of inflation and set appropriate monetary policies. — NN/EM