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SAM

Published:
2018-07-10 11:36:22 BdST

Preparatory meeting on monetary policy statementBB for 'growth supportive' MPS


FT ONLINE

The central bank has started preparations to formulate its next monetary policy, giving top priority to curb the rising trend of inflation and help the productive sectors achieve maximum economic growth.

The priorities were suggested at an internal preparatory meeting on the monetary policy statement (MPS) at Bangladesh Bank (BB) headquarters in Dhaka on Monday, with Governor Fazle Kabir in the chair.

The meeting reviewed the country's overall economic situation and suggested that the next MPS for the first half (H1) of the current fiscal year should be 'growth-supportive', with keeping inflation at reasonable level, according to sources.

All general managers (GMs) and senior officials attended the preparatory meeting, they said.

The MPS is likely to be announced in the last week of this month, a BB senior official hinted.

The meeting also emphasised on ensuring the quality of credit through strengthening monitoring and supervision by both the BB and the commercial banks.

The BB's latest move came against the backdrop of rising trend in the inflationary pressure on the economy in the just-concluded fiscal year (FY) 2017-18, following higher prices of food grains.

The inflation rose to 5.78 per cent in the FY 18 on annual average basis from 5.44 per cent a year before, according to the Bangladesh Bureau of Statistics (BBS) data.

Food inflation stood at 7.13 per cent in the FY 18 as compared to 6.02 per cent in the previous fiscal.

"We're formulating the next MPS considering the upward trend in prices of petroleum products in the global market, possible rising trend of inflation and ensuring proper use of credit," the central banker said to media after the meeting.

The government had set the inflation target at 5.6 per cent for the FY 19.

In the next MPS, the central bank will put emphasis on boosting SMEs and agriculture loans along with micro-credit to create employment opportunities across the country, according to the BB officer.

The latest situation of capital market along with both foreign exchange and money markets will be considered in the next MPS, they added.

At the meeting, the latest interest rates situation on both lending deposit were discussed, according to the sources.

Currently, the banks, particularly the private commercial ones are now implementing the proposed cut in their lending and deposit rates in line with the decisions of the Bangladesh Association of Banks (BAB).

On June 20, BAB decided to bring down the interest rates on lending and deposit to 9.0 per cent and 6.0 per cent respectively from July 01.

As a part of the moves, the BB is scheduled to meet with former finance ministers, former governors and senior economists in this connection tomorrow (Wednesday).

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