'Cautiously accommodative' monetary policy stance announced | 2016-07-26 | daily-sun.com

'Cautiously accommodative' monetary policy stance announced

BSS     26th July, 2016 08:16:22 printer

'Cautiously accommodative' monetary policy stance announced

Bangladesh Bank (BB) has unveiled half-yearly monetary policy statement (MPS) on Tuesday maintaining 'cautiously accommodative' stance.

 

16.4 percent overall credit growth on year-on-year in fiscal year 2016-17 (FY17) with 16.5 percent to private sector and 15.9 percent to public sector has been projected in the policy, BSS reports.

 

"In one word, the new monetary policy is cautiously accommodative," BB Governor Fazle Kabir said while announcing the monetary policy for July-December 2016 at a press conference at the central bank in the city Tuesday.

 

He said the policy direction for the first half (H1) of the FY17 is to pursue a stance that would help expand overall credit to keep inflation at a comfortable level.

 

Broad money (M2) growth for FY17 is set at 15.5 percent, based on the GDP growth and CPI inflation targets of 7.2 percent and 5.8 percent, said the former bureaucrat.

 

He said the main objective of the central bank's monetary policy is to keep the Consumers' Price Index (CPI) inflation stable alongside supporting the output and employment growth.

 

"We have been adopting a cautious, accommodative, inclusive and environment-friendly monetary stance for ensuring adequate credit growth as such stance is serving our economy well in maintaining stability of the inflation," Fazle Kabir observed.

 

He said the declining trends of interest rates in the domestic market will be sustained by strengthened supervisory oversight on efforts of bringing down nonperforming loans. The policy interest rates of the central bank (repo, reverse repo rates) will continue to remain unchanged at the current level of 6.75 percent and 4.75 percent, he added.

 

He observed that the MPS 2016 played a vital role in maintaining 5.92 percent inflation rate against the projected 6.2 percent side by side with achieving 7.05 percent economic growth despite global economic recession.

 

"The projected domestic credit growth is sufficient for attaining the government's targeted GDP growth of 7.2 percent for FY17," said Fazle Kabir.

 

He said the central bank's motivational efforts and supervisory surveillance will continue to focus on inclusive, productive use of credit with particular attention to adequacy on credit flows to agriculture, SMEs and environmentally benign "green" output initiatives.

 

"BB's monetary and financial policies will continue supporting inclusive, environmentally sustainable growth; addressing its developmental role in the longer term risks to macro-financial stability," the BB said in its core objectives of the MPS.

 

Like previous years, BB prepared the MPS after eliciting views and suggestions of expert economists, business entrepreneurs and other stakeholder groups, said the central bank.


Top