BANGLADESH Bank has announced the new monetary policy for January to June period of 2016 and the governor of the central bank claimed it to be growth accommodative without much risk of inflation. Although such six monthly monetary policy which is in practice for the past couple of years in fact misses much of the pre-determined targets, it nonetheless works as a guideline to chalking out broader economic decisions having bearing on macroeconomic factors in relation to investment in the economy by the private sector.
As it appears the central bank has set the private sector credit growth at 14.8 percent which is slightly lower than that of last six months target of 15 percent but above the actual archived target at 13.7 percent in November last. It is cautious but supportive monetary stance; the central bank governor claimed having the aim to spur the investment in the economy to bring vibrancy beating back ongoing stagnation.
The new policy has also lowered the repo and reverse repo rates by 50 basic points to suggest that commercial banks would be able to take loan from the central banks at lower cost to make available more fund in the hands of the banks to offer big loans to new business. In the word of the central bank governor, the country is enjoying certain political stability at the moment and investors who were so far reluctant to invest fearing risks may exploit the new situation to expand business. Meanwhile the lower rate of repo will discourage banks to put their excess deposit to the central banks and rather try to use the money to financing new business.
Explaining the new targets of the new monetary policy the Governor pointed out that it aims at achieving upto 7 percent growth under the current fiscal although the projections vary now between 6.8 percent and 6.9 percent. He said one of the major policy outlooks of the new monetary policy is to recalibrate the private sector’s investment focus in the economy from ‘engine of export’ to the ‘engine of creating new domestic demand based growth’ of the economy.
The new policy will however remain available for constant adjustment based on the facts in the ground and the economic outlook in the horizon. Meanwhile its attempt to reign in misuse of import bills to check capital flights is praiseworthy and the attempt to look for ways and means how to use the excess reserves in the hands of the central bank to expedite the country’s economic growth also deserve appreciation.
The emphasis on flexible exchange rate to support exports and make sure that expatriates families get better remittance is also pragmatic. Though the new monetary policy aims at achieving higher economic growth but much of it will depend on how the economy will perform over the next six months.
As it appears the central bank has set the private sector credit growth at 14.8 percent which is slightly lower than that of last six months target of 15 percent but above the actual archived target at 13.7 percent in November last. It is cautious but supportive monetary stance; the central bank governor claimed having the aim to spur the investment in the economy to bring vibrancy beating back ongoing stagnation.
The new policy has also lowered the repo and reverse repo rates by 50 basic points to suggest that commercial banks would be able to take loan from the central banks at lower cost to make available more fund in the hands of the banks to offer big loans to new business. In the word of the central bank governor, the country is enjoying certain political stability at the moment and investors who were so far reluctant to invest fearing risks may exploit the new situation to expand business. Meanwhile the lower rate of repo will discourage banks to put their excess deposit to the central banks and rather try to use the money to financing new business.
Explaining the new targets of the new monetary policy the Governor pointed out that it aims at achieving upto 7 percent growth under the current fiscal although the projections vary now between 6.8 percent and 6.9 percent. He said one of the major policy outlooks of the new monetary policy is to recalibrate the private sector’s investment focus in the economy from ‘engine of export’ to the ‘engine of creating new domestic demand based growth’ of the economy.
The new policy will however remain available for constant adjustment based on the facts in the ground and the economic outlook in the horizon. Meanwhile its attempt to reign in misuse of import bills to check capital flights is praiseworthy and the attempt to look for ways and means how to use the excess reserves in the hands of the central bank to expedite the country’s economic growth also deserve appreciation.
The emphasis on flexible exchange rate to support exports and make sure that expatriates families get better remittance is also pragmatic. Though the new monetary policy aims at achieving higher economic growth but much of it will depend on how the economy will perform over the next six months.
