The central bank is set to unveil its second half-yearly (H2) monetary policy statement (MPS) today (Wednesday) with a likely goal of achieving sustainable economic growth, putting a curb on inflation.
Bangladesh Bank (BB) Governor Fazle Kabir will announce the MPS for the January-June period of this fiscal year (FY), 2018-19, at 11:30 am on the day, officials said.
The BB has formulated the growth-supportive monetary policy, giving top priority to job creation, ensuring greater flow of credit to the productive sectors, they added.
The MPS is likely to focus more on the flow of quality credit through strengthening the monitoring and supervision works on the part of the central bank and all the scheduled banks.
However, the private sector credit growth target is likely to see a downward revision from the previous target, set by BB in the MPS for H1 of FY 19.
The central bank projected that the private sector credit would grow at 16.80 per cent in June 2019, according to the MPS for the July-December period of FY 19.
"The private sector credit growth target must be over 16 per cent for H2 of this fiscal," a BB senior official told the FE.
The central bank is likely to maintain its cautious stance on inflation following the rising trend in core inflation in 2018, he hinted.
The core inflation expanded to 4.65 per cent on annual average basis in December last from 3.59 per cent in January 2018. It was 3.94 per cent in July 2018.
Talking to the FE, another BB official said over 16 per cent credit growth to the private sector is enough for achieving 7.80 per cent GDP (gross domestic product) growth by the end of this fiscal year, if the quality of credit could be ensured.
Meanwhile, the private sector credit growth came down to 13.20 per cent in December 2018 on a year-on-year basis from 14.01 per cent a month ago, the BB data showed.
The growth was 3.60 percentage points lower than the BB's target of 16.8 per cent for H1 of FY 19.
The BB officials are hopeful that credit flow to the private sector would increase in H2 of FY 19 to meet foreign trade financing, estimated at around US$100 billion.
The officials further said the policy rates, including CRR (cash reserve requirement), Repo and Reverse Repo, may remain unchanged for H2 of FY 19.
In the MPS, the central bank may focus on boosting micro, small and medium enterprises (MSMEs) and agriculture loans along with micro-credit to help create employment opportunities across the country, they added.
The situation now prevailing in the capital and money markets and reserve position would be taken into cognizance in the new MPS, according to the BB officials.
"The prevailing capital market-friendly stance of the central bank may continue for H2 of FY 19," a central banker told the FE.
He also said BB may focus on bringing down the volume of classified loans in the banking sector by ensuring credit discipline in the sector.
The amount of non-performing loans (NPLs) rose by nearly 34 per cent to Tk 993.70 billion as on September 30, from Tk 743.03 billion as on December 31, 2017, the BB data showed.
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