Macroeconomic Determinants of Inflation in Bangladesh

Abstract

The paper intends to investigate the key determinants of inflation in Bangladesh using the data for the period 2009-10 to 2019-20. The variables used in the study are broad money supply, foreign direct investments, GDP growth, foreign exchange rates and trade balance. Ordinary least squared method has been used to conduct the empirical analysis. The results found that broad money supply, foreign direct investments and trade balance has positive and significant association with the inflation. GDP growth has negative and insignificant relation with the inflation whereas foreign exchange has positive but insignificant association with the inflation. The unexpected event of Covid-19 has also found to have some contribution in affecting the inflation rate.