The Bangladesh Bank has decided to keep close watch on the inflation trend before depreciating the Taka further in line with IMF-set conditions, officials said.

The International Monetary Fund (IMF) wants exchange rate of the local currency with the US dollar fully market-based which will help stop channelling of foreign remittances through unofficial routes and lead to buildup of foreign-currency reserve.

On the other hand, Bangladesh Bank officials say they are not ready to make exchange rate more flexible at this stage in view of possible consequences of further depreciation of the local currency which may fuel inflation furthermore.

They say if the taka sees further depreciation following exchange-rate flexibility, imports will be costlier more, raising commodity prices again. People have been suffering from high rates of inflation since early 2022 after war broke out in Ukraine.

The finance ministry convened a stocktaking meeting Thursday ahead of the IMF loan-review team's Dhaka visit early next month to check what progresses have been made so far to meet what the lender wants for changes on the economic and financial front.

The central bank officials at the meeting could not submit a timeline on going for market-based exchange rate of the local currency.

"They want to see the trend of inflation before taking decision," a senior finance official who attended the meeting said..

"And, will discuss the issue once the IMF team reaches Dhaka," he added.

Another finance division official says the central bank wants to pursue a "wait-and-see" policy before deregulating the exchange rate.

"The beginning of market-based exchange rate will depend on resilience power of our market."

The IMF team is due in Dhaka early next month to conduct the fourth review of the $4.7-billion loan programme.

If the team finds the achievements satisfactory, they will recommend the IMF board to release the fifth tranche amounting to $530 million by June along with the deferred fourth tranche of $645 million that remained pending since February.

The rate of inflation has started receding in the recent months though still hovering close to double-digit levels.

In February, the point-to-point inflation fell to 9.32 percent from 9.94 per cent in January. The food inflation came down to 9.24 percent from 10.72 percent in January.

The government predicts that the point-to-point inflation will come down to a low between 7.0 and 8.0 percent at the end of this fiscal year, thus easing people's misery caused by high prices to some extent.