The central bank has started preparations to formulate its upcoming monetary policy, giving top priority to curb the rising trend of inflation and help the productive sectors achieve maximum economic growth.
The priorities were suggested at an internal preparatory meeting on the monetary policy statement (MPS) at Bangladesh Bank (BB) headquarters in the capital Thursday, with Governor Fazle Kabir in the chair.
The MPS is likely to be announced in the last week of this month, officials said.
All general managers (GMs) and senior officials attended the preparatory meeting, they said.
The meeting reviewed the country's overall economic situation and suggested that the next MPS for the first half of the current fiscal year (H1) should be 'growth-supportive', with keeping inflation at reasonable level.
It also emphasised on ensuring the quality of credit through strengthening monitoring and supervision by both the BB and the commercial banks.
The BB's latest move came against the backdrop of possible rising trend in the inflationary pressure on the economy in the coming months, following higher prices of food, particularly rice, due to flood.
The country's inflation (point-to-point) as measured by consumers' price index (CPI) increased slightly in the month of March this year mainly because of rise in prices of both food and non-food items.
The inflation rose to 5.39 per cent in March from 5.31 per cent a month ago, according to the Bangladesh Bureau of Statistics (BBS) data.
Food inflation stood at 6.89 per cent and non-food inflation at 3.18 per cent in March as compared to 6.84 per cent and 3.07 per cent respectively in February.
On the other hand, the inflation came down to 5.39 per cent on annual average basis in March this year from 5.41 per cent in February.
"We're formulating the next MPS considering the upward trend in prices of petroleum products in the global market, declining trend of inward remittances, possible rising trend of inflation and ensuring proper use of credit," a BB senior official told the FE after the meeting.
He said the central bank has advised the banks for taking effective measures to reduce the volume of non-performing loans (NPLs) immediately.
"There is no alternative to curb inflationary pressure on the economy for achieving sustainable economic growth," another BB official said while explaining the main objective of the new monetary policy.
The government as well as the central bank had set the inflation target at 5.5 per cent for the fiscal year 2017-18.
In the next MPS, the BB will give emphasis on boosting SMEs and agriculture loans along with micro-credit to create employment opportunities across the country, according to the central banker.
The latest situation of the private sector credit growth was reviewed at the meeting, which observed it was still witnessing a high level growth considering the inflationary pressure on the economy.
The growth in credit flow to private sector came down to 16.03 per cent in May, 2017 on a year-on-year basis from 16.21 per cent a month ago. It was 16.06 per cent in March 2017.
The last MPS for the second half of the last fiscal year had set a target for the private sector credit growth at 16.50 per cent at the end of June, 2017.
The latest situation of capital market along with both foreign exchange and money markets will be considered in the next MPS, according to the BB officials.
siddique.islam@gmail.com
Curbing flood-induced inflation may get priority
Siddique Islam | Published: July 07, 2017 00:00:00 | Updated: February 01, 2018 00:00:00
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