Highlights of monetary policy

Sun Online Desk

30th July, 2015 03:20:20 printer

Highlights of monetary policy

Bangladesh Bank (BB) on Thursday unveiled its flagship monetary policy statement (MPS) for the first six months of the current 2015-16 financial year, reports BSS.


Governor Dr Atiur Rahman announced the MPS at a press conference at the central bank headquarters at 11 am.


Highlights of the Monetary Policy: This is a cautious but explicitly pro-growth monetary policy stance supporting the 7 percent growth target and the 6.2 percent inflation target for the fiscal year 2016.


Reserve money is projected to grow at 16 percent and broad money (M2) at 15.6 percent which are adequate to support the growth and inflation targets.

It has also taken the growth rates of both public and private credit into account.


Domestic credit is projected to grow at 16.5 percent at the end of the fiscal year 2016. Private sector credit is projected to grow at 15 percent and public sector credit at 23.7 percent.


This is a growth supportive monetary policy that promotes investments through the strategy of selective easing.


Policy interest rates (repo, reverse repo) will remain unchanged, but easing will be considered after point-to-point headline general inflation and core CPI inflation take a sustained declining trend.


Bangladesh Bank's supervisory vigilance on banking governance will be straightened further to clamp down on loan delinquencies.


Besides, already ongoing inclusive financing for farm and non-farm small and medium enterprises (SMEs) and the export development (EDF) fund support for exporters, new medium to longer term financing windows totaling USD 500 million will be opened in the fiscal year 2016 for financing of manufacturing enterprises, and for greening nitiatives in the export oriented textiles, apparels, and leather sectors.


As before, Bangladesh Bank's monetary and financial policy stance remains grounded on the developmental central banking mandate enshrined in its charter.