Sunday, 14 August, 2022
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BB unveils ‘accommodative’ monetary policy today

Bangladesh Bank (BB) is going to place an accommodative monetary policy today for the first half of new fiscal year to balance between inflation control and private sector credit growth.

“The monetary policy will address the present macro-economic challenges including inflation,” a top policy maker of the central bank told Daily Sun requesting not to be named.

BB Governor Fazle Kabir along with deputy governors and chief economist will place the monetary policy statements at its head office in Dhaka on Thursday afternoon.

MPS is an outline of monetary policy stance designed to support the government's policies and programmes in pursuit of faster inclusive economic growth and poverty reduction. The new policy statement will focus on present macro-economic challenges including high inflationary pressure, volatile foreign currencies and increasing balance of trade, according to the economic analysts. The overall inflation rate in the country          has increased to 7.42 per cent in May, which was 6.29 per cent in April while it stood at 8.30 per cent in food products from 6.23 per cent in April.

Economists think there is no chance to bring changes in interest rate as the economy, which is on a recovery process from pandemic setback, is driven by the private sector.

“Firstly, the policy statement will focus on inflation, a major challenge now across the world. Our economy is on recovery process from the pandemic era. Private sector leads the way and market needs sufficient money flow to keep the economy active. So, there should be a balance between inflation control and expansion of private sector credit,” Dr Zaid Bakht, chairman of Agrani Bank, told the Daily Sun.

He thinks the central bank cannot increase the interest now rate as the government currently promotes private sector credit to revive the economic activities.

According to the economist, the new policy statement will be “accommodative” in the context of current global economy and fiscal policy of the government.

Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur said the central bank should tighten the policy to stabilise the inflation and foreign exchange rate immediately to keep the maco-economic aspects normal.

“The interest rate should follow the market demand. At present, it needs to control the inflation. If the increasing trend in import continues. It needs to be brought down,” Dr Mansur, chairman of Brac Bank, told the Daily Sun.

Bangladesh Bank kept provisions in place so that the government could borrow Tk 764.52 billion through treasury bills and auctioning bonds from the banking system in the entire fiscal year to meet deficits.

Along the same policy, the private sector debt saw a 14.8 percent growth year-on-year.