DHAKKA: Bangladesh Bank (BB) Governor Atiur Rahman, addressing a press conference in Dhaka, said if the current political unrest continues, the country’s economy would be badly hit. The monetary policy was marked by the “cautiously restrained” monetary policy stance of the latter half of 2014.
He said that there is no new loosening or tightening in the new monetary policy. The cautiously restrained policy will continue unchanged from January-June 2015.
“The MPS will pursue to contain and stabilise CPI (consumer price index) inflation at desired moderate levels, to anchor inflation expectations among the general population,” he said.
Besides inflation, the MPS also aims at internal demand boosting, supporting an investment-friendly monetary path and promoting an inclusive growth framework. Private sector credit will have space for 15.5 per cent growth, a substantially higher level than that of the 12.7 per cent November 2014 level, the governor said.
Besides maintaining continuity in the monetary policy stance, BB will strengthen the momentum of investment-friendly reforms in the credit and financial policies accompanying the monetarypolicies in the second half of FY2015.
“The welcome trend of recovery in momentum of investment and output activities in H12015 strengthened optimism of FY15 GDP growth, significantly exceeding the earlier projections (6.5-6.8 per cent) based on time series trend analyses,” Rahman said.
BB aims at supplying reserve money at the growth rate of 15.9 per cent and broad money at 16.5 percent, at the end of FY2015.
Rahman said, at the retail level, both deposit and lending rates fell in July-December of FY2015 and the interest spread on average decreased from 5.31 per cent in June 2014, to 5.17 percent in December 2015. “The central bank will continue its effort to reduce this spread,” he added.
Rahman, however, said despite some upside risks, inflation will be kept under control, to reach the target of 6.5 per cent by June 2015.
The central bank will pursue a prudent monetary policy to strike a balance between objectives of moderate inflation and respectable growth, he said, adding “money supply and policy rates will be controlled accordingly while opening further avenues to promote investment through greater financial inclusion”.
About the foreign currency exchange, the governor said, “The central bank will continue to maintain comfortable amount of foreign currency reserves, to cover imports of five to 10 months. This safety net is required to avoid any sudden collapse in the value of the Taka and to ensure a healthy growth of imports of productive inputs.”
