Focus on jobs, inflation as BB unveils monetary policy today
Tuesday, 19 January 2010
Siddique Islam
The central bank is set to unveil the second half-yearly monetary policy aiming to maintain price stability and create jobs across the country through an inclusive economic growth, officials said.
Bangladesh Bank (BB) Governor Atiur Rahman will announce the half-yearly (January-June) monetary policy today (Tuesday) to help productive sectors achieve maximum economic growth.
"We want to achieve inclusive economic growth through promoting financial inclusion by strengthening different credit programmes across the country," a senior official of the Bangladesh Bank (BB) told the FE Monday.
He also said it would be a growth-supportive monetary policy, that considered recommendations of the stakeholders.
The central bank, for the fist time, has sought opinions from stakeholders including trade bodies for adding a new dimension to shaping up the monetary policy stance, the BB officials said.
Top two trade bodies - the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) -earlier recommended that the central bank continue the existing accommodative monetary policy for the next six months of the fiscal 2009-2010 (FY10).
The BB official also said the new monetary policy was designed to curb inflationary pressures on the economy and generate employments, which in turn would help increase the purchasing power of the people.
Under the new monetary policy, the central bank will ask banks and non-banking financial institutions (NBFIs) to speed up credit flow to some real sectors including agriculture and small and medium enterprises (SMEs).
They said all indicators of the monetary policy and the exchange rate would be included in the new monetary policy statement.
The monetary policy will give emphasis on how to manage the existing inflationary pressure on the economy and use of the excess liquidity in the banking system.
The country's Consumers Price Index (CPI) inflation slightly increased to 6.71 per cent on a point-to-point basis in October last from 4.60 per cent in September because of the rise in prices of both food and non-food items.
"The BB may, however, play a proactive role in checking the non-food inflation, which in our view, has been rising because of a large increase in the excess liquidity in the banking system, caused by the continued increase in the flow of remittances from abroad as well as the decline in import payments," the MCCI suggested.
On the other hand, the FBCCI appealed to the central bank to keep vigil on the trends of inflation and be prepared to respond promptly and effectively through policy adjustment to put inflation in check.
The excess liquidity in the banking sector reached an all-time high of Tk 351.11 billion in October last. In June last year it was Tk 347.62 billion, according to the central bank statistics.
Another BB official, however, said the excess liquidity in the banking system already started to show a declining trend as credit flow to the private sector was increasing.
The growth in credit flow to the private sector rose to 16.73 per cent in November last from 15.42 per cent in October, 2009, the BB data showed.
The first-ever monetary policy statement was formally published in January 2006 and the central bank of Bangladesh declared that it would publish it on a half-yearly basis along with a half-yearly policy review.
The central bank is set to unveil the second half-yearly monetary policy aiming to maintain price stability and create jobs across the country through an inclusive economic growth, officials said.
Bangladesh Bank (BB) Governor Atiur Rahman will announce the half-yearly (January-June) monetary policy today (Tuesday) to help productive sectors achieve maximum economic growth.
"We want to achieve inclusive economic growth through promoting financial inclusion by strengthening different credit programmes across the country," a senior official of the Bangladesh Bank (BB) told the FE Monday.
He also said it would be a growth-supportive monetary policy, that considered recommendations of the stakeholders.
The central bank, for the fist time, has sought opinions from stakeholders including trade bodies for adding a new dimension to shaping up the monetary policy stance, the BB officials said.
Top two trade bodies - the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) -earlier recommended that the central bank continue the existing accommodative monetary policy for the next six months of the fiscal 2009-2010 (FY10).
The BB official also said the new monetary policy was designed to curb inflationary pressures on the economy and generate employments, which in turn would help increase the purchasing power of the people.
Under the new monetary policy, the central bank will ask banks and non-banking financial institutions (NBFIs) to speed up credit flow to some real sectors including agriculture and small and medium enterprises (SMEs).
They said all indicators of the monetary policy and the exchange rate would be included in the new monetary policy statement.
The monetary policy will give emphasis on how to manage the existing inflationary pressure on the economy and use of the excess liquidity in the banking system.
The country's Consumers Price Index (CPI) inflation slightly increased to 6.71 per cent on a point-to-point basis in October last from 4.60 per cent in September because of the rise in prices of both food and non-food items.
"The BB may, however, play a proactive role in checking the non-food inflation, which in our view, has been rising because of a large increase in the excess liquidity in the banking system, caused by the continued increase in the flow of remittances from abroad as well as the decline in import payments," the MCCI suggested.
On the other hand, the FBCCI appealed to the central bank to keep vigil on the trends of inflation and be prepared to respond promptly and effectively through policy adjustment to put inflation in check.
The excess liquidity in the banking sector reached an all-time high of Tk 351.11 billion in October last. In June last year it was Tk 347.62 billion, according to the central bank statistics.
Another BB official, however, said the excess liquidity in the banking system already started to show a declining trend as credit flow to the private sector was increasing.
The growth in credit flow to the private sector rose to 16.73 per cent in November last from 15.42 per cent in October, 2009, the BB data showed.
The first-ever monetary policy statement was formally published in January 2006 and the central bank of Bangladesh declared that it would publish it on a half-yearly basis along with a half-yearly policy review.