"It will push up lending rate, affect private sector investment, increase cost of production and reduce private sector competitiveness," FBCCI (Federation of Bangladesh Chambers of Commerce and Industry) said in a statement.

The FBCCI also said the proposed increases in fuel, power and gas prices will threaten the economy.

The Bangladesh Bank has announced monetary policy for the first half of the current fiscal year (2007-08).

The FBCCI demanded the central bank to reconsider the contractionary policy for the sake of private sector growth, employment and economic growth.

The apex trade body also stressed the need for reducing government borrowing from the banking system to curb inflation, taking into consideration the adverse impact of raising commercial banks' mandatory reserve requirement with Bangladesh Bank.