BB unveils monetary policy today
Thursday, 10 January 2008
FE Report
The central bank is set to unveil what it says an 'accommodative' monetary policy to spur economic growth while keeping the inflationary trend under tight leash, officials said Thursday.
Bangladesh Bank governor Salehuddin Ahmed will announce the half-yearly monetary policy today (Thursday), which will replace the Bank's existing 'tightened monetary policy,' announced in July 2007.
"The country now has two main challenges: spurring growth and keeping inflation under control. The new monetary policy will reflect that," a senior central bank official said.
"This will be a pro-growth monetary policy. It will review the existing interest rates. If necessary, the bank will take measures to reduce the rates so as to increase credit flow to real sectors," he said.
"We hope these selective monetary tools will bring dynamism in the economy, which is affected by two successive floods in July and August and the devastating cyclone in November," he added.
The central bank announces the new monetary policy amid signs of sharp economic slowdown and a stubborn inflation that has been hovering around 10 per cent since July last year.
On Wednesday, the Bangladesh Bureau of Statistics said the point-to-point inflation has hit 11.21 per cent in November, 2007, the highest monthly rate in 11 years, while the World Bank predicts that Bangladesh growth will slow down to 5.5 per cent this fiscal.
The Finance Adviser in his budget speech had projected a growth of seven per cent, up from 6.6 per cent in 2006-7, for the year ending in June 30 this year, while keeping inflation at around 6.5 per cent.
The central bank, however, last month said the economy would now slow down to 6.2-6.5 and inflation would average around 8.5 per cent, due largely to the two major natural disasters and an all-time high global oil and commodity prices.
Central bank officials said the new monetary policy for the January-June would help achieve annual real gross domestic product (GDP) of 6.5 per cent for the current fiscal and it will also keep the inflation under control.
"The aim will be to increase credit flow to some real sectors including agriculture, small and medium enterprises (SME). We have seen that increasing credit flows to real sectors does not have much impact on inflationary trend," another official said.
The central bank is set to unveil what it says an 'accommodative' monetary policy to spur economic growth while keeping the inflationary trend under tight leash, officials said Thursday.
Bangladesh Bank governor Salehuddin Ahmed will announce the half-yearly monetary policy today (Thursday), which will replace the Bank's existing 'tightened monetary policy,' announced in July 2007.
"The country now has two main challenges: spurring growth and keeping inflation under control. The new monetary policy will reflect that," a senior central bank official said.
"This will be a pro-growth monetary policy. It will review the existing interest rates. If necessary, the bank will take measures to reduce the rates so as to increase credit flow to real sectors," he said.
"We hope these selective monetary tools will bring dynamism in the economy, which is affected by two successive floods in July and August and the devastating cyclone in November," he added.
The central bank announces the new monetary policy amid signs of sharp economic slowdown and a stubborn inflation that has been hovering around 10 per cent since July last year.
On Wednesday, the Bangladesh Bureau of Statistics said the point-to-point inflation has hit 11.21 per cent in November, 2007, the highest monthly rate in 11 years, while the World Bank predicts that Bangladesh growth will slow down to 5.5 per cent this fiscal.
The Finance Adviser in his budget speech had projected a growth of seven per cent, up from 6.6 per cent in 2006-7, for the year ending in June 30 this year, while keeping inflation at around 6.5 per cent.
The central bank, however, last month said the economy would now slow down to 6.2-6.5 and inflation would average around 8.5 per cent, due largely to the two major natural disasters and an all-time high global oil and commodity prices.
Central bank officials said the new monetary policy for the January-June would help achieve annual real gross domestic product (GDP) of 6.5 per cent for the current fiscal and it will also keep the inflation under control.
"The aim will be to increase credit flow to some real sectors including agriculture, small and medium enterprises (SME). We have seen that increasing credit flows to real sectors does not have much impact on inflationary trend," another official said.