Dhaka, Bangladesh (BBN) – The central bank of Bangladesh is set to unveil its half-yearly monetary policy to curb inflation and helping the productive sectors aiming to achieve maximum economic growth, officials said.
Bangladesh Bank (BB), the country’s central bank, Governor Atiur Rahman will announce the half-yearly (July-December) monetary policy Wednesday afternoon to help real sectors for achieving economic growth.
“The new monetary policy has designed giving top priority to curb inflation and helping the productive sectors for achieving an inclusive economic growth,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
The BB official also said the central bank wants to keep price stable both internal and external and create employment opportunities through boosting investment in the real sectors like agriculture and small and medium enterprises (SME).
“We may continue the existing accommodative monetary policy with cautious mode for the next six months of this fiscal year,” the BB official said without elaborating.
On January 30 last, the central bank announced its ongoing accommodative monetary policy to achieve an inclusive economic growth by facilitating productive sectors while keeping inflationary pressure under control.
The central bank, however, has increased its policy interest rates including repurchase agreement (repo) and reverse repo three times during the last six months period of this year to curb inflationary pressures on the economy.
The BB may continue revisiting such policy interest rates in the July-December period of this fiscal to curb inflationary pressures through squeezing credit flow to the less productive sectors, the central bank officials said.
“Such rate hike would only discourage credit flow to the non-productive sectors such as purchase of luxury goods, but not the productive ones,” another central banker said while replying to a query.
The central bank has taken the move against the backdrop of higher credit growth to the private sector in the recent months, he said, adding that the private credit growth stood at 27.50 per cent in May which was higher than the target, set by the BB earlier.
The BB had set the private sector credit growth target at 16 per cent by the end of June 2011.
The country’s inflation as measured by consumers’ price index (CPI) moved slightly in the month of June last on the annual average basis mainly because of increase in prices of food items.
The inflation rate moved up to 8.80 per cent in June 2011 from 8.67 per cent of the previous month on the annual average basis, according to the Bangladesh Bureau of Statistics (BBS) data.
On the other hand, the point-to-point inflation rate came down to 10.17 per cent in June last from 10.20 per cent in May 2011.
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.
BBN/SSR/AD-27July11-10:24 am (BST)