Dhaka, Bangladesh (BBN) – The central bank is going to unveil a ‘cautious’ monetary policy aiming to achieve sustainable economic growth through curbing inflation.

Bangladesh Bank (BB) Governor Atiur Rahman will announce the half-yearly (January-June) monetary policy Thursday afternoon to help real sectors for achieving maximum economic growth.

“The new monetary policy has been designed attaching top priority to measures to curb inflation and achieve 7.0 per cent gross domestic product (GDP) growth by the end of the current fiscal year (FY),” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN while explaining main objectives of the monetary policy statement (MPS).

He also said the central bank is advising the commercial banks to discourage credits to non-productive sectors including consumer financing.

“We expect that the inflation will bring down at single digit from the existing double digit one by the end of June this year,” the central banker without elaborating.  

The country’s inflation as measured by consumers’ price index (CPI) eased slightly in the month of December last on the point-to-point basis mainly because of decrease in prices of food items.

The inflation rate came down to 10.63 per cent in December 2011 from 11.58 per cent of the previous month on the point-to-point basis, according to the Bangladesh Bureau of Statistics (BBS) data.

However, the annual average inflation rose to 10.71 per cent in December last from 10.51 per cent of the previous month.

“We’ve taken different measures including revised policy interest rates only to discourage credit flow to the non-productive sectors such as purchase of luxury goods, but not the productive ones,” another BB official said while replying to a query.

He also said the central bank may continue revisiting such policy interest rates in the January-June period of this fiscal to curb inflationary pressures through squeezing credit flow to the less productive sectors.

Declining trend of the private sector credit growth continued until December last, the BB official said, adding that the rate of private sector credit growth came down to around 18 percent from 19.33 percent of the previous month.

The BB had set the private sector credit growth target at 18 per cent by the end of June 2012.

The central bank may trim the existing target of private sector credit growth considering the existing trend of such loan expansion, the BB official said.

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-26Jan12-12:30 pm (BST)