Staff Reporter :
Bangladesh Bank (BB) on Sunday unveiled the monetary policy statement (MPS) for the January-July period of the fiscal year 2016-17 amid influx of excess liquidity in the commercial banks and stable inflation level.
“The monetary policy stance for the second half is cautious but growth supportive,” said BB Governor Dr Fazle Kabir while announcing the new monetary policy at a media briefing held at the bank’s headquarters in the capital.
This is the first monetary policy announcement by Dr Fazle Kabir after he took over as the central bank governor.
“The growths for private sector credit and domestic credit have been kept unchanged considering the recent economic realities. But this will not hamper free flow of credit to the core economic sectors,” said the BB Governor.
He said the key focus of the monetary policy is to maintain price stability and achieve a higher economic growth.
In the policy, the private sector credit growth and domestic credit growth have been fixed at 16.5 per cent and 16.4 per cent respectively.
It also projected a 7.2 per cent GDP growth and inflation rate at 5.8 per cent in line with the National Budget for the fiscal year 2016-17. “The current macroeconomic condition suggests that the economy will grow in line with the budgetary expectation and the growth may surpass if performance of all the core economic sectors remain buoyant,” said Dr Fazle Kabir.
Replying to a question, the BB governor said, the new monetary policy will give proper attention to make the country’s stock market vibrant and stable.
“At the same time, it will remain alert about any unusual ups and downs in the share price indices to avoid the recurrence of the 2010 like situation”.
The BB Chief warned the country stock market regulator, Bangladesh Securities and Exchange Commission, to be more cautious in order to avoid another 2010-like crash as the stock markets have been on an upward trend for the last few months.
He also asked the commercial banks to strengthen their monitoring so that the bank loans can hardly be diverted into the capital market.
Replying to a query, Dr Fazle Kabir said that the central bank is looking into the recent fall in the migrant remittances. The fall in remittance flow might be resulted from fall in the oil price in the international market.
“Fall in oil prices forced the Gulf countries to cut down their development expenditure affecting income of the Bangladeshi workers there leaving an adverse impact on overall remittance flow,” he added.
The BB Governor expressed his unhappiness over the rising borrowing by the government from the saving tools at high interest rates saying such a tendency is affecting development of the local bond market.
BB Deputy Governors SK Sur Chowdhury and SM Moniruzzaman, and economic affairs adviser Md. Akhtaruzzaman were present during the announcement of the monetary policy.
