Higher credit flow, taming inflation to get top priority

FE Report | Published: July 26, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

The central bank is set to announce a new monetary policy today (Saturday) for July-December period, which, according to insiders, will be a restrained one.
In the meantime, a top official of the bank earlier hinted there would be some targets set in the 18th monetary policy of the Bangladesh Bank to give a boost to the capital market-which has long been in a sagging mood since its collapse at the fag end of 2010.
The monetary policy statement was scheduled to be presented on July 27, but the date was advanced in consideration the upcoming Eid vacation.
The Bangladesh Bank (BB) will unveil the monetary policy statement (MPS) at 11 in the morning at its headquarters in the city. Governor Dr Atiur Rahman will announce the policy formally.
The July-December MPS will aim at gearing up the country's overall economic activities through boosting both local and foreign private investment, sources said.
People familiar with the preparation of the MPS hinted that the private- sector credit-growth target might increase slightly for the first half of the new fiscal year.
It is expected that the MPS would help productive sectors in achieving maximum economic growth and ensuring employment generation across the country.
The BB in its January-June MPS last wanted a credit growth for the private sector at 16.5 per cent. But, the growth was 9.41 per cent during the time between July and May, according to the central bank's official statistics.
But unofficial statistics of the central bank showed the private-sector credit having grown 11 per cent in last July-June period. Add on to this 3.5 percent foreign loan and the private-sector credit growth stands at 14.5 per cent in total (local and foreign loans combined).
The MPS is also aimed at pegging the inflation down to 6.0 per cent, sources said.
Experts said the BB's monetary policy implementation has been in line with the January-June 2014 half-yearly MPS. But they said the surge in the net foreign assets well beyond the projected amount created liquidity-management problem for the governing bank.
Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh, said through sterilisation by issuing BB Bills, growth in all key monetary aggregates like reserve money and broad money were kept within the MPS limits.
He said: "We expect BB's monetary policy stance for the next six months to maintain the current restrained monetary policy stance with monetary targets in line with the inflation in the range of 6.0-7.0 per cent.