BB to unveil HY monetary policy today

Express (July 27, 2011)

The central bank is set to unveil its half-yearly (HY) monetary policy today (Wednesday), aiming to curb inflation and help the productive sectors for achieving maximum economic growth, officials said.

Bangladesh Bank (BB) Governor Atiur Rahman will announce the half-yearly (July-December) policy.

"The new monetary policy has been designed, attaching top priority to curb inflation and help the productive sectors, for achieving an inclusive economic growth," a senior BB official told the FE.

He also said the central bank wants to keep prices stable both internally and externally, and create employment opportunities through boosting investment in the real sectors, like agriculture and small and medium enterprises (SMEs).

"We may continue the existing accommodative monetary policy with cautious mode for the next six months of this fiscal," the BB official said.

On January 30, 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 BB, however, has increased its policy interest rates including repurchase agreement (repo) and reverse repo three times during the last six months of this year to curb inflationary pressures on the economy.

The central bank may continue revising 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 officials said.

"Such rate hike would discourage credit-flow to the non-productive activities, such as purchase of luxury goods, but not to the productive ones," another BB official said.

The central bank has taken the move against the backdrop of higher credit growth to the private sector during the recent months. The private sector credit growth stood at 27.50 per cent in May, which was higher than the previous BB-set target, he said.

The BB reset the private sector credit growth target at 16 per cent by the end of June.